Congress was finally able to pass a budget deal late last year, meaning there will be no more government shutdowns for the foreseeable future, one would hope.
The deal, however, did not extend long-term unemployment benefits for 1.3 million Americans. President Obama called on Congress to extend those benefits, which the Congressional Budget Office said would cost $26 billion a year.
Therein lies the problem.
Among Republicans who might want to extend these benefits — some do not — many want the cost to be offset, presumably with spending cuts. While the extension survived an early Senate vote, it’s still not clear a clean extension could ultimately pass.
Considering the economic benefits (PDF) unemployment insurance offers, and the fact that costs were not offset when they were signed into law by President Bush, spending cuts do not make much sense.
Still, if Republicans will insist on longterm benefits being fully paid for, Democrats have plenty of ideas to offer. Two in particular would easily cover the costs of extending unemployment benefits, enjoy broad public support, and could help address concerns over income inequality.
End Oil Subsidies
The United States continues to subsidize the oil and gas industry, to the tune of around $7 billion a year. In case you’ve missed it, these companies are not just scraping by. For example, ExxonMobil made nearly $45 billion in 2012, falling just short of the world record for most profits in a year — set by ExxonMobil in 2008.
Meanwhile, oil prices have continued to rise. Some may be due to a drop in U.S. oil production under Bush, a drop erased in the first four years of the Obama administration. However, prices have not changed at all in the interim.
Nearly three-quarters of Americans support ending these subsidies, and many politicians have joined the push, but efforts to scrap them in Congress have gone nowhere.
Democrats have very little to lose by offering these as a way to pay for a three-month extension of unemployment benefits.
Offshore Tax Loopholes
Technically, there’s nothing illegal about a company moving profits offshore to avoid paying taxes; it’s simply one of many flaws in the current tax code.
The tax code allows for deferral — companies keeping profits overseas and not paying taxes until the funds are brought back to the U.S. — and many companies take advantage. Unfortunately, this means the government has less money to pay for important services like unemployment benefits.
There’s broad support for closing these sorts of tax loopholes, including, according to one survey, from small business owners who have trouble competing with big companies better able to stash profits overseas.
One study found 82 of the top 100 publicly traded companies moved funds overseas to avoid paying taxes. The odds are your local coffee shop isn’t using those gimmicks.
The Stop Tax Haven Abuse Act, introduced by Sen. Carl Levin (D-MI), would close a number of the worst offshore loopholes, bringing in as much as $220 billion over ten years, according to the Joint Committee on Taxation. That annual $22 billion would more than pay for the cost of a three-month extension of unemployment benefits.
Will Congress Act?
All told, the $29 billion a year these two changes would bring in would be more than enough to cover the cost of extending long-term unemployment benefits for a full year if Congress wanted to do so.
Of course, both of these ideas involve revenue, something which Republicans have historically been opposed to. It’s unlikely Republicans would support either one, having called specifically for spending cuts to offset the cost of an extension. But that stance puts them in opposition to the majority of Americans on both issues.
Even worse for the GOP, not passing an extension of unemployment benefits could make their chances of victory in 2014 somewhat slimmer. This certainly wouldn’t make up for the harm not extending these benefits would do, but it does offer another argument for the GOP to ultimately extend unemployment benefits even if the cost is not offset.