Dear Friend:

A short time ago, I voted to support the package of tax cuts, job creation measures and unemployment assistance negotiated by the President and Senate Republicans.  The package was far from perfect – there are elements that I find poorly designed and others that contradict my most basic sense of fairness.  However, I was convinced that, with a variety of looming deadlines, this compromise was the last, best chance for the 111^th Congress to secure real relief for the middle class and for those who have been hit hardest by the tough economy.  

I was influenced most heavily by the opportunity to extend unemployment insurance benefits to millions of Americans who have lost their jobs during the economic downturn – something Senate Republicans had previously refused to consider.  Had the overall package failed, these unemployed individuals and their families would have seen their financial lifeline evaporate.  As much as there were other provisions of the package that made me inclined to oppose it – such as an extension of tax breaks for the wealthiest Americans, including an estate tax give-away of unforgivable scope – I could not, in the end, vote against a bill that would provide critical assistance to those most in need. Jettisoning the bill and starting over, as some had suggested, would not in my judgment have secured a better deal on the provisions that benefit those most deserving of our support and would likely have led to a worse deal.   

I struggled with this decision and only reached it in the final hours before the vote. I greatly value the many letters and e-mails I received in recent days concerning this issue.  I look forward to your continued input.  

Below is a more detailed explanation of my decision to support this legislation.

·         Relief for working families. I strongly support the extension of the full 2001 and 2003 tax cuts for middle class families.  Raising taxes on 98% of Americans in the wake of a brutal recession and near-record unemployment is not the path to stronger economic growth.  Non-partisan estimates suggest that this package will significantly boost economic growth, adding over 1 million new jobs to our economy and reducing the unemployment rate by more than a full percentage point. The extension of the expanded Earned Income Tax Credit (EITC), the Child Tax Credit and the tax deduction for college tuition provide meaningful relief to low-income and middle-class families.  According to the non-partisan Center for Budget and Policy Priorities, these benefits for middle- and lower-income working Americans will keep more than 2 million Americans, including 1.2 million children, above the poverty line,. 

·         Extension of Unemployment Insurance. Most compelling to me was inclusion in the bill of a 13-month extension of Emergency Unemployment Insurance (UI) for out-of-work Americans.  This will save 2 million Americans from being cut off during this holiday season and another 4.7 million that would have been cut off at some point during the next twelve months, including 65,000 Marylanders. 

·         Permanent extension of enhanced small business expensing. Small businesses employ the majority of working Americans and serve as the engine that drives our economy. Yet small business owners have struggled terribly in this recession—stretching reserves to meet payroll, borrowing from personal savings to maintain inventory and making hard choices to avoid furloughs, layoffs and bankruptcy.  This legislation included a permanent extension of enhanced small business expensing which will help businesses quickly recover the cost of certain capital expenses by allowing them to write-off up to $125,000 of capital expenditures.

Things Not to Like About the Bill

·         Tax cuts for the wealthy. Despite claims to the contrary, the stimulative benefit of deficit-financed tax cuts for the wealthiest two percent of Americans is not an efficient way to boost growth.  According to the non-partisan Congressional Budget Office, extending the 2001 and 2003 tax cuts for top earners would produce no additional reduction in the unemployment rate in 2011 and would reduce unemployment by just one-tenth of one percent in 2012.  Spending $79 billion on tax cuts for the wealthy during a time of such economic distress is unwise and immoral.

·         Estate Tax. Among the most troubling elements of this package is the proposed policy governing the estate tax.  This legislation completely exempts estates up to $5 million in value and sets the tax rate at only 35 percent for estates above that amount. Benchmarked against a more responsible proposal that would set the exemption at $3.5 million and the tax rate at 45 percent, this represents a breathtaking, deficit-financed give-away of $24 billion to less than 6,600 extremely wealthy families.  That is unconscionable. For that reason, I voted for the Pomeroy Amendment, which would have pegged the estate tax to a more reasonable standard. Unfortunately, that measure was defeated on the floor. 

·         Not dealing with the deficit. Regardless of whether you believe the tax cuts in 2001 and 2003 were warranted, they were financed by adding $2.4 trillion to the national debt.  It makes no sense to now provide even more deficit-financed tax cuts for the wealthy, particularly as there is no evidence that these cuts will create any real stimulus for economy. We are adding billions more to our national debt and getting nothing in return.

·         Potentially undermining Social Security. The two percent payroll tax cut will divert revenue from general operating funds to compensate the Social Security Trust Fund for any loss in revenue associated with this proposal.  While this provision will increase the take-home pay for 155 million households, I am concerned that this may undermine the long-term solvency and integrity of Social Security.

Tipping the Scales

After weighing all the pros and cons of this legislation, my decision was ultimately determined by the relief it will provide to millions of Americans who have lost their jobs and will spend this holiday season worrying about how to make ends meet. For those families that have been run over by this tough economy, the unemployment insurance contained in this bill is a lifeline, plain and simple.

I appreciate the opportunity to share these views and look forward to your continued input as we work to rebuild our country.  

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