November 12, 2010 Letter Urging Senators Snowe and Collins to Support Tax Cuts for Maine Families, Oppose Tax Cuts for the Wealthy and Extend Unemployment Benefits

The Honorable Susan M. Collins

United States Senator

413 Dirksen Senate Office Building

Washington, DC 20510

Dear Senator Collins:

In less than two months, virtually all of the tax cuts enacted in 2001 and 2003 are set to expire.  In order to strengthen our economy, create jobs, and tackle long-term budget deficits and debt, Congress should extend the tax cuts that benefit middle class and working Americans while letting the tax cuts that help only the wealthiest expire as scheduled. Additionally, Congress must extend emergency unemployment benefits for those Americans and Mainers trying hard to find work as our economy recovers.

Unemployment Benefits

Our nation has gone through the longest, and by most measures, the worst, recession since the Great Depression.  More than 30,000 Maine jobs have been lost since the recession began in December 2007, raising our unemployment rate to 7.7 percent (3.0 points higher than before the recession). Moreover, 50,000 of our neighbors are unemployed, and 150,000 Mainers (11.4 percent) now live below the poverty line in 2009.


Though the economy has begun to grow, the latest Blue Chip forecast projects that unemployment will remain over 9% through 2011.  In August 2010, 14.9 million workers were out of work, but there were only 3.2 million job openings.  That is five jobless Americans fighting for every available job opening. It is not true that Mainers or Americans would rather collect unemployment than work. 

Until the economy recovers, families need unemployment benefits to help them pay housing, fuel and other day-to-day expenses.  The regular unemployment insurance system, which provides benefits for 26 weeks, is insufficient; almost half of those who are out of work have been unemployed for six months or longer.

Tax Cuts

Thanks to a number of provisions, the 2001 and 2003 tax cuts provided tax relief to middle and lower-income families. Congress should extend these tax cuts, including the ten percent rate bracket, marriage penalty relief, and Child Tax Credit.  The costs of continuing these policies are exempt from pay-as-you-go rules, and although policymakers should be concerned about long-term deficits and debt, extending these tax cuts is essential to strengthening the economy. 

At the same time, Congress should let the tax cuts for the wealthiest Americans expire.  Extending the upper income rate cuts will do little to generate economic growth and will not help small business.

The Congressional Budget Office has concluded that tax cuts for the wealthiest Americans are the least effective mechanism to generate jobs and economic growth. Furthermore, 97% of small businesses will benefit from the extension of the middle class tax cuts, whereas only 3% of taxpayers with business income will benefit from extending the upper income tax cuts.  This 3% are small businesses in name only: they are mostly large law firms, Wall Street bond traders, and some of the nation’s 400 wealthiest individuals.

Congress should also forego extending the tax cuts for the wealthiest taxpayers due to the resulting staggering cost. Extending these tax cuts for one year would cost $40 billion. But if they are extended, chances are they will not end after a year or two but be extended again and again.  Extending them for ten years would cost approximately $1 trillion.  This would only exacerbate our long-term fiscal problems.

We respectfully urge you to support extending emergency unemployment benefits, continuing tax cuts for middle class families and letting the tax cuts for the wealthiest Americans expire.  This is the best approach to support Maine’s middle class, working families, and small businesses, fueling vigorous economic recovery and starting to address long-term fiscal issues. 

Thank you for consideration of this letter.  Please do not hesitate to contact us if we can be of assistance; we stand ready to assist in way possible.


Maine Center for Economic Policy

Dan Coyne, Fiscal Policy Analyst