As expected, the Senate has passed an extension of unemployment benefits by a 60-40 vote. President Obama will next sign it, perhaps tomorrow. Arguing about that bill at this point won't do us any good.
But Congress does now have a few months before the next extension of unemployment benefits comes up, so they could use this time to start identifying ways to finance the next debate on this subject rolls around in November. Congress chose to use the deficit to finance this round. Doing so again, I think, would send a bad signal to markets and creditors about the seriousness with which we take our red ink.
Here's the deal, though: Financing $30 billion or more in unemployment benefits after the elections will pale in comparison to the fiscal challenge Congress will face when the Bush tax credits expire on December 31.
Keeping those tax cuts in place for another decade will cost about $2 trillion . Coming up with a way to finance them will be anything but easy. And let's be realistic: For all the ballyhooing about the Bush tax cuts, there's no way Congress is going to get rid of many of them. The dirty little secret in those cutsis that they actually help many families.
For example, families receive tax credits for children under 17. Also, the tax cuts finally ended the weird wrinkle that caused a married couple to pay more in taxes than two single people living together with the same income would pay. There are numerous other cuts from that era that you can read about here that I bet members of both parties will continue to support.
So, how will we finance their extension?
Bob Bixby of the Concord Coalition has the best answer I've heard so far. In a phone interview earlier today, he argued that we need to put their financing into the larger framework of decisions Congress must make to control the $13 trillion debt. And Congress has a chance to start making those decisions after the election.
The debt panel that Obama created then will report back with recommendations for Congress to consider over the next year. If we're lucky, Congress will deal with a number of big issues, like reforming Social Security and redoing the tax code. At that point, we could start factoring in how to pay for an extension of tax cuts that, truthfully, a number of Americans enjoy.
So I'm not misunderstood, let me be clear: I do think we need to find a way to finance an extension of those cuts. But we should do so alongside addressing numerous other challenges.
Easy? No. But we have a chance to do a number of things right. Let's not blow it.