Weekly Audit: Why Are Unemployment Benefits A Major Political Fight?

by Zach Carter, Media Consortium blogger

Congress finally authorized an extension of unemployment benefits on Wednesday, providing a critical lifeline to families across the country and an absolutely essential boost to the economy.

But with the jobless rate hovering near 10 percent, minimum measures like unemployment benefits shouldn’t be a source of controversy. Lawmakers should be debating big-picture jobs packages to get people back to work, not drips and drabs that keep a worst-case-scenario from getting unbearable.

As Annie Lowrey notes for the Iowa Independent, Senate Republicans blocked the unemployment benefits bill for two months, causing benefits to lapse for 2.6 million Americans. That’s a humanitarian outrage. When people don’t have access to this minimal support, they can’t pay bills or feed their kids. There is no excuse for anyone in a position of power to cut off access to such basic social necessities. So what’s the hold up?

It’s a mix of talking points and public misconception. Conservatives have been demonizing the unemployed and using erroneous claims about the federal budget deficit as an excuse to block unemployment benefits, and that narrative has been reinforced by President Barack Obama’s handling of the public debate over the economic stimulus package approved in February 2009.

Unemployment Benefits = Economic Stimulus

In addition to the humanitarian imperative, there’s a broader economic case for extending unemployment benefits. When people are out of work, they can’t spend money. If people don’t spend money, businesses can’t sell anything. And if businesses can’t sell anything, they have to lay off more workers. Putting money in the pockets of the unemployed isn’t just a humanitarian necessity—it also prevents layoffs and creates jobs.

But you wouldn’t know it from the economically illiterate nonsense that conservatives have been spewing during the unemployment benefits debate. Writing for The Nation, Robert Scheer quotes prominent conservative intellectual Niall Ferguson. Here’s Ferguson’s vile diatribe blaming lazy, unemployed people for the recession:

“If you pay people to do nothing, they’ll find themselves doing nothing for very long periods of time. Long-term unemployment is at an all-time high in the United States, and it is a direct consequence of a misconceived public policy.”

$293 a week

Ferguson actually said that. He really believes that a major reason why unemployment is so high is because the United States pays out unemployment benefits, and that jobs would just miraculously be created if we stopped supporting the people hit hardest by the recession. And as Seth Freed Wessler emphasizes for ColorLines, Republican politicians repeatedly parroted this nonsense argument again as they attempted to block the unemployment benefits legislation.

Wessler notes that the average unemployment benefits package comes to just $293 per week. People like to feel like they have contributed meaningfully to society and be rewarded with an honest day’s pay. They do not choose to live in squalor out of laziness, as much as Ferguson might wish that were the case.

Preventing more public-sector layoffs

The economy has shed 8 million jobs since the Wall Street crash. Our job woes are a direct result of recklessness in the upper echelons of the financial sector—lazy workers did not create the recession, and they are not prolonging it.

Given the enormity of lost jobs, you’d think politicians would be considering robust programs to put people back to work—hundreds of billions of dollars in jobs programs, rather than a $30 billion extension of unemployment checks.

As Danny Schechter details for GRITtv, the economy is facing a host of major hurdles that hit families hardest. In addition to epic joblessness, we’re also facing record foreclosure numbers and state budgets that are stretched beyond the breaking point. The state situation is dire. Without federal aid, states will be forced to lay off 900,000 public employees in the coming months

That’s what makes the jobs debate so crazy. There are easy ways to prevent layoffs and create jobs right now. A quick injection of cash into state governments would have an immediate stabilizing effect. The government can’t bring the unemployment rate down to 5 percent overnight, but it can keep things from getting worse and start bringing the rate down.

Don’t blame the deficit

But, as Lowrey notes, some conservatives are not blaming the unemployed, but harping on the deficit, claiming that they’re all for benefits, they just want them to be paid for. This is a disingenuous excuse for inaction.

The conservative deficit-talk is totally misleading, and it’s the wrong way to deal with deficits. Since Republicans have been universally opposed to all tax increases, demanding that unemployment benefits be paid for means pulling spending out of other programs, which means cutting jobs in other areas (slashing the defense budget probably wouldn’t hurt the jobs picture, but good luck getting a Republican to vote for it).

The U.S. doesn’t have a deficit problem. If it did, investors would be demanding a very high interest rate on U.S. Treasury bonds. But in fact, the interest rate on those bonds is at record lows. If the U.S. did have a deficit problem, however, sabotaging jobs and growth would be a lousy way to fix it. Consider Ireland. The country had a vastly larger deficit than that faced by the U.S., and implemented draconian austerity programs. Those spending cuts hit economic growth so hard that the nation’s deficit problem actually got worse, so much worse that the rating agency Moody’s just downgraded Ireland’s debt.

If the U.S. wants to deal with deficit issues, it should address big long-term structural issues, like the enormous defense budget, extremely generous tax rates for the wealthy and the rising cost of health care. It makes zero economic sense to be attacking jobs in the name of the deficit, when doing so only makes the deficit larger.

What about that economic stimulus package?

So why can’t we get a decent jobs package? As Steve Benen notes for The Washington Monthly, much of the public uneasiness stems from misunderstandings about how the economic stimulus package passed in February 2009 worked.

The stimulus was very much a success—it kept the unemployment rate from reaching 12 percent or higher. But it was also much too small, in part because the Obama administration underestimated the severity of the recession, but mostly because Republicans created ludicrous political hurdles for the package, forcing it to shrink. Unfortunately, with unemployment still out of control, many in the public believe the stimulus didn’t actually stimulate. That’s the wrong lesson to learn. As Benen puts it:

“Imagine there’s a massive, dangerous fire. Those responsible for the blaze insist that some lighter fluid should take care of the problem, while the fire department recommends water. Forced to compromise, the fire department uses less water than is needed, and the blaze is only partially contained.”

It’s about time Congress got around to extending unemployment benefits. But in the face of the longest and most severe jobs crisis since the Great Depression, much stronger action on jobs is needed, and soon.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Tags: aid to states, Annie Lowrey, colorlines, Danny Schecter, deficit, Economy, foreclosure, GritTV, Iowa Independent, Ireland, jobs, jobs bill, Robert Scheer, Seth Freed Wessler, Steve Benen, stimulus, The Nation, The Washington Monthly, unemployment, unemployment benefits (all tags)

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