Republicans and conservative economists voiced rising frustration Friday that Democrats are moving forward with a series of symbolic votes against extending the Bush-era tax cuts, even as unemployment rose to 9.8 percent and rattled investors and Wall Street analysts.
“This is just a terrible employment report, because with the increase of jobs last month people thought that was the beginning of an upward trend,” Diana Furchtgott-Roth, the Hudson Institute senior fellow and former chief economist for the Department of Labor, tells Newsmax. “Now this shows that last month . . . was just a blip. And we’re back to the low amounts of job creation we saw previously.”
Wall Street analysts who had expected an increase of 150,000 in November were disappointed to learn a mere fraction of that number of jobs — 39,000 — actually had been created.
The data the Labor Department released Friday was actually worse that the disappointing jump in unemployment to 9.8 percent would suggest, analysts said. Other key indicators – including average weekly hours worked, average hourly earnings, and average weekly earnings – declined as well.
The jobs news comes as Senate Majority Leader Harry Reid plans to convene a Saturday session of the Senate to vote on two measures that have virtually no chance to become law. One bill would extend the Bush tax cuts for only the middle class, while allowing automatic hikes in rates for income earned above $250,000 per household. The other would allow tax hikes for only the wealthiest individuals earning $1 million or more annually.
All 42 Republicans have said they will oppose both measures, which means Democrats will fall short of the 60 votes they need to invoke cloture and bring the items before the full Senate for a vote.
A similar attempt to use a symbolic vote to win favor with the Democratic left occurred Thursday in the House. But economists are warning that time is running out to strike a deal that would extend the Bush tax cuts.
“I think it’s already causing a crisis in confidence, and that’s the case with this unemployment rate,” Furchtgott-Roth, who was chief of staff of former President George W. Bush’s Council of Economic Advisers, tells Newsmax. “Employers don’t know what their tax rates are going to be next month. Consumers don’t know either. And there just isn’t much economic activity. Employers just are not hiring because they are uncertain as to what is going to happen.
“If you were an employer,” she explains, “and you didn’t know if your tax rate was going to be 35 or 40 percent, you didn’t know what your capital gains rate on dividends was going to be next month -- it just grinds everything to a halt.”
Friday’s news that unemployment jumped just when some analysts thought the economy had turned the corner triggered a host of calls for Congress to stave off what would be one of the largest tax hikes in U.S. history if the Bush tax cuts are allowed to expire as scheduled at midnight on Dec. 31:
• Douglas Holtz-Eakin, the former head of the Congressional Budget Office, wrote on NationalReview.com: “But mostly this is an alarm bell for the lame-duck Congress. No more games — extend all the tax cuts for two years, patch the AMT, and turn to cutting spending and tax reform.”
• Brian Riedl, lead budget analyst for the Heritage Foundation, tells Newsmax: “There is not a single school of economic thought that would allow such a large tax increase during such a weak economy, and yet that is what Congress is doing. And they’re showing why voters voted for change last month.”
• Oft-mentioned 2012 GOP presidential contender Rep. Mike Pence, R-Ind., issued this statement: "Today's heartbreaking unemployment report should be yet another wake-up call to Democrats that raising taxes in the middle of the worst economy in 25 years is a mistake."
• RNC Chairman Michael Steele stated that the jump in unemployment “only confirms that President Obama’s agenda of out-of-control spending, higher taxes, and bigger government has the economy moving in the wrong direction. Despite the clear message sent in last month’s elections, Democrats continue to ignore the American people by remaining focused on enacting a host of liberal priorities that will do nothing to create jobs.”
• House Minority Whip Eric Cantor, R-Va., released a statement that Congress should reassure job-creating businesses by taking tax cuts off the table immediately. “Political gimmicks — like yesterday’s vote in the lame-duck House — are emblematic of a dysfunctional Washington and a sad example of what millions of Americans profoundly rejected on Election Day.
So far, voters who thought they sent a message to Washington on Nov. 2 have received little indication that their voices were heard.
“It’s not just trying to raise taxes in the middle of a downturn,” Furchtgott-Roth tells Newsmax. “The Congress hasn’t even passed a budget for this year. That’s irresponsible. Congress has left the tax rates unknown.
In some ways, she says, the current situation is unprecedented.
“It’s never come this close where people don’t know what the tax rates are going to be next month,” she tells Newsmax. “The IRS has to be printing out forms, employers have to figure out withholding schedules — it’s completely irresponsible, it’s a do-nothing Congress.”
Says Riedl: “There is no easy explanation for why Congress is ignoring the will of the American people, beyond the possibility that old habits die hard. The left has a belief system that supports big government and high taxes, and they’re not letting the voice of the people get in the way.”
And while media reports continue to suggest a deal is in the works to extend unemployment benefits in return for a two-year extension of all tax cuts, Riedl says that despite the fragile economy there’s no way to know if a deal will be made in time.
“I have no idea,” he says. “It’s anybody’s guess.”
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