Grassley: Tax cut deal better than alternative

Something is better than nothing to Sen. Chuck Grassley.

A deal to extend the Bush tax cuts for two years and unemployment benefits for 13 months isn't perfect, the Iowa Republican said Dec. 8, but it's better than the alternatives.

“Two years of certainty is better than the uncertainty of doing nothing or, if you don't do anything, the certainty of very bad things being the policy,” Grassley said about the agreement with the White House that is drawing fire from both liberals in the president's party as well as conservative Republicans.

Liberals, including Iowa Democrat Sen. Tom Harkin, are upset with Obama for agreeing to extend tax cuts for millionaires in exchange for the extension of unemployment benefits without corresponding budget offsets. Harkin has said he will vote “no” on the tax cut compromise.

Sen. Jim DeMint, R-S.C., a leading spokesman for Tea Party Republicans, is threatening to vote against the package. Without making the tax cuts permanent, he said, the deal fails to deliver the certainty Republicans have argued is necessary to encourage businesses to invest and create jobs.

“We don't need a temporary economy, which means we don't need a temporary tax rate,” DeMint told conservative talk-show host Hugh Hewitt. “A permanent extension of our current tax rates would allow businesses to plan five and 10 years in advance, and that's how you build an economy.”

Grassley doesn't disagree, but as a practical matter, the tax cuts-for-unemployment benefits deal is as much as Republican are going to get in a Democratic-majority Senate.

“I think DeMint is expressing what 41 other Republicans would like to have happen,” Grassley said. “We would like to extend existing tax policy permanently, but we're in a position of having less certainty if we don't get anything done this year. We will have the biggest tax increase in the history of the country which won't bring the economy out of recession.”

Making the 2001 tax cuts permanent would be better for the economy than a two-year extension, Grassley said, “but you got to remember (Senate Majority Leader Harry) Reid blocked paid-for extensions (of unemployment benefits) five times this year.”

“Reid is the one person that can stop everything,” Grassley said.

In the end, he said, two years of not having a tax increase is going to do more economic good than having the biggest tax increase in the history of the country, “but not as much good as what DeMint wants to do.”

“I don't know, in this sort of finding common ground, nobody ever gets everything they want,” Grassley said.

Also as a practical matter, Grassley said, Congress needs to approve the extensions for tax cuts and unemployment benefits.

“You don't raise taxes in a recession … and there's still a period of time before we get unemployment down,” he said.

“You're not going to leave 2 million (unemployed) people with nothing,” he said.

Besides, unemployment benefits are likely to do more to stimulate the economy than Obama's stimulus “which was supposed to keep unemployment below 8 percent and didn't,” Grassley said.