As Congress returns to Washington after the holiday break its members must pick up where they left off by extending the Social Security tax cut and providing unemployment payments to the long-term unemployed for the final nine months remaining in 2012.
Those recession-fighting benefits that go almost entirely to the 99 percent have a price tag of $160 billion, give or take a billion. Economists worry that letting the cuts expire might shove the country back into recession. But nobody, from the Obama administration on down, has come up with a way to pay for the perks within a reasonable period of time.
Many of the ideas proposed would be permanent changes that would cut spending or raise revenues in relatively small amounts. Eliminating Saturday delivery of mail and other postal service reforms, for instance, would only pay for two months of the temporary tax cuts but would last forever.
In World War II, Congress inaugurated luxury taxes to raise money for the war.
A similar tactic would make sense today. As has been pointed out over and over again for the past three years, the impact of the Great Recession has been grossly unequal. While the poor became desperately poor, the rich grew richer. The way to pay for the payroll tax cuts is to impose a yearlong Equalization Tax on the very rich. Not to punish them, but to make it unnecessary to raise a batch of taxes permanently on the nation as a whole.
Willie Sutton, a notorious bank robber in the 1920s and 30s, was asked why he only robbed banks. Because, he said, thats where the money is.
Suttons logic applies to the dilemma Congress faces. It should tap the rich for this $160 billion because they have it, wont miss it and bear enough responsibility for the economic collapse to make Congress feel virtuous for sending the bill to them.