Today, the U.S. Senate passed a pork-laden tax package by an 81-19 margin. As a result, every American will be spared a considerable tax hike in 2011. In fact, many of us will be keeping a greater percentage of our earnings.
But there are also problems with the bill: it grows the deficit and will probably have a negligible impact on high unemployment. A temporary (two-year) freeze on the tax rates leaves uncertainty in the system — uncertainty which encourages business owners to keep their cash on the sidelines rather than grow their workforce. The lack of reduction to the employers contribution to payroll taxes is another disincentive to hiring. And providing folks in hard times with 13 months of unemployment benefits — benefits which apparently do not accrue to those who of necessity accept a string of part-time jobs –does not exactly give an impetus to get more bodies into the workforce (though it might, in the short-term, prevent a decrease in consumer spending). Moreover, these 13 months of unemployment benefits are not offset by spending cuts elsewhere in the bill. On the contrary, the Senate bill was weighed down with pork projects to pay back constituencies which helped elect various senators in the last election.
That is why several major presidential contenders are coming out against the bill. Among them is Governor Romney, who wrote a clear-headed (though somewhat brief) op-ed in USA Today.