Why 'temporary' tax cuts never die: Payroll tax and 3 other examples

One last bit of business for Congress in 2011 is to extend the tax breaks or tax fixes that, though designated “temporary,” get renewed year after year. Sixty-seven tax provisions set to expire Dec. 31. About half are typically extended retroactively. 

4. Unemployment insurance extension

Greg Lindstrom/The Muskegon Chronicle/AP
Gwen Williams listens to speakers in Muskegon, Mich., during a rally on Thursday calling to extend unemployment insurance benefits.

To ease the impact of economic downturns on jobless workers, Congress has passed temporary emergency unemployment programs eight times since 1958. On June 30, 2008, amid the Great Recession, President George W. Bush signed an emergency unemployment measure to provide as many as 79 weeks of federal jobless benefits to out-of-work Americans. It was subsequently expanded to 99 weeks through 2011 – the highest level ever offered in the US.

Fully extending that level of benefits through 2012 would be expected to cost $50 billion. House Republicans propose a $34 billion plan that would extend emergency unemployment insurance past Dec. 31, 2011, but would reduce the current maximum from 99 weeks of benefits to 59 weeks next year, including new requirements that workers search for work and make progress toward a GED or other training to get back to work. Democrats say the jobs simply aren’t there – that four workers are chasing every one job.

If Congress does not act, some 1.8 million workers will lose unemployment benefits in January. During 2012, some 6 million jobless people will exhaust their eligibility. Congress has always extended benefits when the US unemployment rate is above 7.2 percent. In the November jobless report, the most recent, that rate was 8.6 percent. 

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