There are a lot of mixed emotions on the latest legislation to extend tax rates and increase spending. The legislation extends the current income tax rates for 2 more years. The estate or death tax goes up, but not quite as much as what was scheduled to happen. The payroll tax on the employee portion of Social Security will be cut from 6.2% to 4.2% for one year. Meanwhile, the legislation also includes increased spending, particularly an extension of unemployment payments.
The Republicans and Democrats compromised on this. The Republicans got the tax cuts extended and the Democrats got more spending. Meanwhile, we all get a bigger national debt. Ron Paul supported the legislation because he said doing nothing would mean that taxes would rise. I almost always agree with Ron Paul's votes, but I disagree with him on this one. I completely understand his position and I am sympathetic towards it, but I think he should have voted no.
This legislation was a bribe to get the tax rates extended. Other than the payroll tax being cut, this was not a tax cut. This was preventing current tax rates from going higher. If the tax part of this bill had stood alone as its own bill, then it would be appropriate to support it. But it wasn't. This was legislation that contained good and bad. Ron Paul has typically voted against such legislation.
Extending unemployment is a joke. If someone can't get a job after 2 years, they are either severely handicapped or they are just not trying hard enough. Obviously 99.99% of the people fall into the latter category. It is understandable. If you are collecting unemployment checks and you can't find a job making significantly more, what is the incentive? There are many people that wouldn't be looking for a job anyway. Some people may have wanted to leave the workforce anyway and unemployment payments are just icing on the cake. Any person that is not severely handicapped can find a minimum wage job within 2 years. The government is just encouraging unemployment. Unemployment paid by the government is unconstitutional and unlibertarian to start with. Having it go for longer than 2 years is just plain ridiculous.
This legislation will just add to the deficit and debt because it doesn't address spending. The federal government keeps on spending money like crazy and there seems to be no end in sight. The end will be when the Fed has to stop buying bonds because of massive inflation. Then interest rates will go really high and the government will be forced to cut back. Then we will get a depression. This is all reasonably predictable. The hard part is trying to time it.