State Department of Labor and Industry Secretary Sandi Vito encourages all out-of-work Pennsylvanians to continue to file claims even if their U-C benefits have expired. "Unemployed Pennsylvanians who haven't received all the benefits possible under the federal emergency and extended benefit programs should continue filing claims," Vito said in a press release last week. "Doing so will expedite processing and speed payment in the event that Congress is able to reach an agreement and extend these crucial lifelines for people struggling to find work." Without a tax-cut deal, 140,000 Pennsylvanians will lose their emergency unemployment benefits this month and another 72,000 will do so in January.
Liberal-leaning Democrats in the House have staged a revolt against the tax-cut compromise, arguing that President Obama has backtracked on his campaign pledge to end tax breaks for the wealthiest Americans. They also bash what they feel are overly generous exemptions to the renewed estate tax for 2011. Individual estates worth up to $5 million would be exempt from the estate tax which would stand at 35 percent. Obama counters that he has struck the best deal achievable with GOP members of Congress, acknowledging that the fight will get even harder in the New Year when Republicans control the House.
Conservative Republicans, too, have balked at parts of the deal. The entire package would add about $860 billion to the federal deficit. Congress has already extended unemployment help up to 99 weeks and some lawmakers feel lengthening the term of U-C benefits discourages people from looking for and taking a new job. Governor-elect Tom Corbett, quoting company executives with whom he had spoken, essentially made that same argument on the campaign trail last summer and caught a lot of flak for it.
The package before Congress also includes some other sweeteners designed to stimulate the economy and spike job growth, like a one-year reduction in the individual payroll-tax rate. It would drop from 6.2 to 4.2 percent. And, companies would be able to deduct the entire cost of purchasing new equipment in 2011.
We'll talk on Thursday night to Scott Ehrig, vice president and regional portfolio manager at M&T Investment Group. He says consumers have done a great job of deleveraging their debt but that means they have not been as aggressive in spending which is the prime driver of an economic recovery. "It strengthens the balance sheet long-term but it's not so great for the short-term implications for an economic rebound," he explains. Ehrig favors the tax-cut deal and argues, "This is the stimulus that should have been enacted last year." But he also questions, "Where is the investment in the productive base of the United States? The stimulus I'd like to see is a massive public-works project, a national science driver, for example. To me, that would be something in green energy." Ehrig offers a brighter outlook for job growth and slow, but steady economic expansion in 2011.
Matt Brouillette, president and CEO of the right-leaning think tank, The Commonwealth Foundation, also joins us. The biggest factor hindering economic growth, he says, are the inconsistency and unpredictability of federal policymakers. For example, the provisions of the new Obama deal would only cover the next two years. Companies are reluctant to invest in either people or capital assets if they don't know what the tax climate will be a few years down the road. Also on the panel is Mark Price, labor economist with the left-leaning Keystone Research Center. Price co-authored a report earlier this fall that said hundreds of thousands more Pennsylvanians would be out of work but for the federal government interventions through monetary policy and the economic stimulus packages. KRC executive director Stephen Herzenberg noted, "We have more work to do. To get Pennsylvania's economy going full steam, we need more investment in people and communities - our kids' education, roads and bridges, and local economies. If the federal government trims spending too soon, our economy will get derailed again."
If Congress cannot pass the tax-cut legislation by December 31, the taxes of most American taxpayers will go up in 2011. Let us know what's on your Christmas wish list for Congress. How would you jolt the economy back to good health? Call into the program live on Thursday night at 1-800-729-7532 or send a comment to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or post your thoughts on www.facebook.com/witf.org
