President Obama puts Fiscal Cliff Offer on the Table – What are you willing to give up?
President Obama put his first formalized Fiscal Cliff offer on the table, calling for $1.6 trillion in tax increase, $50 billion of infrastructure spend, removal of the debt ceiling, and extension of emergency unemployment benefits. You can read the CNBC article at http://www.cnbc.com/id/50016612
Why You Should Care
Yesterday’s blog asked the question “what are you willing to give up to fix the deficit?” and it focused on the mortgage interest deduction, which costs roughly $100 billion per year. Today I want to focus on unemployment benefits since the President wants to extend those benefits for another year. Currently, unemployed people can get benefits for up to 99 weeks, basically 2 years, for a cost of $94 billion in fiscal year 2012. Over the last five years, we have paid out $520 billion in total unemployment benefits according to the Congressional Budget Office.
The U.S. economy has been sluggish, job growth has been slow, but we need to accept the fact that high leverage and debt drove unemployment to the low rate of 4.5% in 2007 and that most of these jobs aren’t coming back. At what point are we going to say enough when it comes to unemployment benefits? Two years is simply too long. What if we were to cut that in half? We could save $47 billion next year. Add that to the $100 billion from the mortgage interest deduction and we are now at roughly $150 billion in savings for 2013. What are you willing to give up to balance the budget?