“Five Times George W. Bush Extended Unemployment Insurance Benefits”: It’s Just Bad Policy To Refuse To Renew The Extension
In his December 14, 2002 weekly radio address, President George W. Bush reminded Congress that “no final bill was sent to me extending unemployment benefits for about 750,000 Americans whose benefits will expire on December 28th.”
He went on, “These Americans rely on their unemployment benefits to pay for the mortgage or rent, food, and other critical bills. They need our assistance in these difficult times, and we cannot let them down.”
What was the unemployment rate in December 2002?
It had just risen to 6.0 percent.
The unemployment rate today is 7.0 percent and at the end of this year 1.3 million Americans — including 20,000 veterans — who have been out of work for more than six months will have their unemployment insurance benefits cut off. Republicans in Congress have refused to extend these benefits, though the Congressional Budget Office predicts failing to do so will cost the economy 200,000 jobs.
The Republican Congress heeded George W. Bush’s call to extend unemployment insurance as they had the March before. They passed a bill and he signed it.
In 2003, the American economy was still dealing with the residue of the dot-com bust and economic shock of the 9/11 attacks — but it was still considerably stronger than the America that lived through the Great Recession and continues to see its growth hindered by government austerity.
The extended unemployment benefits Congress is about to let expire actually began under George W. Bush, long after his 2003 extension expired as unemployment dipped below 5 percent again. In 2008, as the financial crisis began to rock the economy, President Bush signed an extension of 13 weeks, 39 weeks total in most states, for anyone living in a state with unemployment over 6.0 percent. He also signed unemployment extensions that specifically helped the victims of 9/11 and Hurricane Katrina.
All five times Bush extended unemployment benefits, he did so with the majority of Republicans in Congress supporting him.
At the peak of the crisis, when unemployment was around 10 percent, Congress and President Obama extended benefits to 99 weeks. The current maximum is 73 weeks.
A requirement of receiving benefits is seeking a new job, but with an estimated three people out of work for every one job opening, cutting off benefits likely won’t encourage jobseekers — as Senator Rand Paul (R-KY) imagines — but instead doom them to permanent unemployment. And the Center for Budget and Policy Priorities (CBPP) estimates that the 1.3 million who will be cut off in 2014 will soon swell to 5 million.
There are two huge reasons why now is not the time to cut off the long-term unemployed, explains the CBPP’s Brad Stone.
While the unemployment rate has declined, the overall employment rate has not grown as it usually would during a recovery.
Secondly, cutting off benefits now for those who need them most is unprecedented.
“At 2.6 percent, the long-term unemployment rate is at least twice as high as when any of the emergency federal UI programs that policymakers enacted in each of the previous seven major recessions expired,” Stone wrote.
Even conservatives recognize that it’s just bad policy to refuse to renew the extension.
Democrats in Congress have vowed to tie the extension to the passage of the farm bill in order to force Republicans to approve it retroactively. They’re expected to be supported by an organized grassroots effort from the left to force vulnerable congressmembers to encourage the GOP leadership to take up the bill.
But it’s safe to assume that if it were President Bush asking for the extension rather than President Obama, the GOP would be happy to just say yes.
By: Jason Sattler, The National Memo, December 20, 2013
“The Biggest Losers”: Conservatives Continue To Impose Gratuitous Suffering On Working Americans
The pundit consensus seems to be that Republicans lost in the just-concluded budget deal. Overall spending will be a bit higher than the level mandated by the sequester, the straitjacket imposed back in 2011. Meanwhile, Democrats avoided making any concessions on Social Security or Medicare. Call this one for Team D, I guess.
But if Republicans arguably lost this round, the unemployed lost even more: Extended benefits weren’t renewed, so 1.3 million workers will be cut off at the end of this month, and many more will see their benefits run out in the months that follow. And if you take a longer perspective — if you look at what has happened since Republicans took control of the House of Representatives in 2010 — what you see is a triumph of anti-government ideology that has had enormously destructive effects on American workers.
First, some facts about government spending.
One of the truly remarkable things about American political discourse at the end of 2013 is the fixed conviction among many conservatives that the Obama era has been one of enormous growth in government. Where do they think this surge in government spending has taken place? Well, it’s true that one major new program — the Affordable Care Act — is going into effect. But it’s not nearly as big as people imagine. Once Obamacare is fully implemented, the Congressional Budget Office estimates that it will add only about 3 percent to overall federal spending. And, if you ask people ranting about runaway government what other programs they’re talking about, you draw a blank.
Meanwhile, the actual numbers show that over the past three years we’ve been living through an era of unprecedented government downsizing. Government employment is down sharply; so is total government spending (including state and local governments) adjusted for inflation, which has fallen almost 3 percent since 2010 and around 5 percent per capita.
And when I say unprecedented, I mean just that. We haven’t seen anything like the recent government cutbacks since the 1950s, and probably since the demobilization that followed World War II.
What has been cut? It’s a complex picture, but the most obvious cuts have been in education, infrastructure, research, and conservation. While the Recovery Act (the Obama stimulus) was in effect, the federal government provided significant aid to state and local education. Then the aid went away, and local governments began letting go of hundreds of thousands of teachers.
Meanwhile, public investment fell sharply — so sharply that many observers refer to it as a “collapse” — as state and local governments canceled transportation projects and deferred maintenance. Researchers, like those at the National Institutes of Health, also took large cuts. And there was a major cut in spending on land and water conservation.
There are three things you need to know about these harsh cuts.
First, they were unnecessary. The Washington establishment may have hyperventilated about debt and deficits, but markets have never shown any concern at all about U.S. creditworthiness. In fact, borrowing costs have stayed at near-record lows throughout.
Second, the cuts did huge short-term economic damage. Small-government advocates like to claim that reducing government spending encourages private spending — and when the economy is booming, they have a point. The recent cuts, however, took place at the worst possible moment, the aftermath of a financial crisis. Families were struggling to cope with the debt they had run up during the housing bubble; businesses were reluctant to invest given the weakness of consumer demand. Under these conditions, government cutbacks simply swelled the ranks of the unemployed — and as family incomes fell, so did consumer spending, compounding the damage.
The result was to deepen and prolong America’s jobs crisis. Those cuts in government spending are the main reason we still have high unemployment, more than five years after Lehman Brothers fell.
Finally, if you look at my list of major areas that were cut, you’ll notice that they mainly involve investing in the future. So we aren’t just looking at short-term harm, we’re also looking at a long-term degradation of our prospects, reinforced by the corrosive effects of sustained high unemployment.
So, about that budget deal: yes, it was a small victory for Democrats. It was also, possibly, a small step toward political sanity, with some Republicans rejecting, provisionally, the notion that a party controlling neither the White House nor the Senate can nonetheless get whatever it wants through extortion.
But the larger picture is one of years of deeply destructive policy, imposing gratuitous suffering on working Americans. And this deal didn’t do much to change that picture.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 12, 2013
“The Coverage Could Get A Lot Worse”: Republicans Will Face Intense Pressure Over Unemployment Benefits
On the morning after lawmakers reached a budget deal that doesn’t include an extension in unemployment benefits, chief GOP budget architect Paul Ryan awoke to a raft of home-state headlines that were all about the nearly 100,000 Wisconsinites who stand to get cut off.
“99,000 unemployed Wisconsinites face cuts,” blared one front page. “Jobless benefits at risk for 99K in Wisconsin,” blared another. “99,000 state residents to lose benefits,” blared a third. You can see those and a lot more at this compilation of front pages put together by Dems on the Ways and Means Committee.
The imminent expiration of the Emergency Unemployment Compensation program for 1.3 million Americans is mostly being treated as a fait accompli in Washington. But it looks to be turning into a very resonant issue in local media in states where many thousands of residents will be directly impacted by it. (Dems have created an interactive map showing how many people in each state stand to lose benefits.)
This fact is central to the emerging Dem strategy to increase pressure on Republicans to agree to an extension. House Dems are working to drum up as much local press coverage of the issue as possible, because local coverage can focus directly on how many constituents in a lawmaker’s state stand to be hurt – making it hit home in a way Beltway media coverage can’t.
For instance, articles like this one in the Las Vegas Review-Journal dramatize the plight of a family set to lose benefits, after the mother was laid off last year from her job as a store manager. Headline: “With benefits on block, jobless Nevadans face uncertainty.” Dems hope such coverage pressures Republicans they deem getable, such as Nevada Senator Dean Heller and Rep. Joe Heck.
This strategy includes placing Op ed pieces by Democrats in papers that serve the districts of top Republicans, such as this one by Rep. Sander Levin in the Cleveland Plain-Dealer, the largest paper in John Boehner’s home state. The game plan is granular: One Democrat points out to me that stats are available on how many would lose benefits on the county level, and that Dems are trying to push these numbers into the coverage, because it is tangible for people in local communities. These numbers are already being reflected in local stories like this one.
Now, it’s fair to question whether Democrats did enough to get a UI extension in the budget deal. Perhaps they could have drawn a harder line on the issue and used their leverage (Republicans will need Dems to pass the deal out of the House) more effectively.
But beyond those legitimate points, it needs to be understood that Dems have not given up on getting Republicans to agree to the UI extension. This could either be accomplished through a stand alone bill or an add on during the budget process, and Democrats continue to press Republicans behind the scenes.
Will any of this matter to Republicans? It’s hard to say, since so many are cosseted away in such safe districts that tough headlines may not matter to them. But the public statements from GOP leaders on the extension have seemed tepid, suggesting their opposition isn’t really visceral. It seems like they’d love for this issue to go away. Boehner has said he’s willing to look at an extension if the White House offers a “plan,” which seems like he’s open to some kind of trade. Of course, conservatives who are already scorching GOP leaders over the deal will only get more outraged if they agree to a UI extension, making it that much harder.
Still, the coverage could get a lot worse, once the deadline looms and human interest stories multiply about folks facing the loss of benefits during the holiday season, at a time when reporters have little else to write about. I wouldn’t give up on Republicans agreeing to the extension just yet.
By: Greg Sargent, The Plum Line, The Washington Post, December 11, 2013
“The Punishment Cure”: The GOP Pattern Of Afflicting The Afflicted While Comforting The Comfortable
Six years have passed since the United States economy entered the Great Recession, four and a half since it officially began to recover, but long-term unemployment remains disastrously high. And Republicans have a theory about why this is happening. Their theory is, as it happens, completely wrong. But they’re sticking to it — and as a result, 1.3 million American workers, many of them in desperate financial straits, are set to lose unemployment benefits at the end of December.
Merry Christmas.
Now, the G.O.P.’s desire to punish the unemployed doesn’t arise solely from bad economics; it’s part of a general pattern of afflicting the afflicted while comforting the comfortable (no to food stamps, yes to farm subsidies). But ideas do matter — as John Maynard Keynes famously wrote, they are “dangerous for good or evil.” And the case of unemployment benefits is an especially clear example of superficially plausible but wrong economic ideas being dangerous for evil.
Here’s the world as many Republicans see it: Unemployment insurance, which generally pays eligible workers between 40 and 50 percent of their previous pay, reduces the incentive to search for a new job. As a result, the story goes, workers stay unemployed longer. In particular, it’s claimed that the Emergency Unemployment Compensation program, which lets workers collect benefits beyond the usual limit of 26 weeks, explains why there are four million long-term unemployed workers in America today, up from just one million in 2007.
Correspondingly, the G.O.P. answer to the problem of long-term unemployment is to increase the pain of the long-term unemployed: Cut off their benefits, and they’ll go out and find jobs. How, exactly, will they find jobs when there are three times as many job-seekers as job vacancies? Details, details.
Proponents of this story like to cite academic research — some of it from Democratic-leaning economists — that seemingly confirms the idea that unemployment insurance causes unemployment. They’re not equally fond of pointing out that this research is two or more decades old, has not stood the test of time, and is irrelevant in any case given our current economic situation.
The view of most labor economists now is that unemployment benefits have only a modest negative effect on job search — and in today’s economy have no negative effect at all on overall employment. On the contrary, unemployment benefits help create jobs, and cutting those benefits would depress the economy as a whole.
Ask yourself how, exactly, ending unemployment benefits would create more jobs. It’s true that some of the currently unemployed, finding themselves even more desperate than before, might manage to snatch jobs away from those who currently have them. But what would give businesses a reason to employ more workers as opposed to replacing existing workers?
You might be tempted to argue that more intense competition among workers would lead to lower wages, and that cheap labor would encourage hiring. But that argument involves a fallacy of composition. Cut the wages of some workers relative to those of other workers, and those accepting the wage cuts may gain a competitive edge. Cut everyone’s wages, however, and nobody gains an edge. All that happens is a general fall in income — which, among other things, increases the burden of household debt, and is therefore a net negative for overall employment.
The point is that employment in today’s American economy is limited by demand, not supply. Businesses aren’t failing to hire because they can’t find willing workers; they’re failing to hire because they can’t find enough customers. And slashing unemployment benefits — which would have the side effect of reducing incomes and hence consumer spending — would just make the situation worse.
Still, don’t expect prominent Republicans to change their views, except maybe to come up with additional reasons to punish the unemployed. For example, Senator Rand Paul recently cited research suggesting that the long-term unemployed have a hard time re-entering the work force as a reason to, you guessed it, cut off long-term unemployment benefits. You see, those benefits are actually a “disservice” to the unemployed.
The good news, such as it is, is that the White House and Senate Democrats are trying to make an issue of expiring unemployment benefits. The bad news is that they don’t sound willing to make extending benefits a precondition for a budget deal, which means that they aren’t really willing to make a stand.
So the odds, I’m sorry to say, are that the long-term unemployed will be cut off, thanks to a perfect marriage of callousness — a complete lack of empathy for the unfortunate — with bad economics. But then, hasn’t that been the story of just about everything lately?
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 8, 2013
“Hurting The Most Vulnerable”: Cutbacks To Unemployment Insurance Came Long Before The Great Recession
You may have heard that we’re in the middle of an unemployment crisis. It’s little wonder that an average of 365,500 people per week made new claims for unemployment benefits over the past month. These high numbers have been straining unemployment insurance programs at the federal and state level, and many states have run out of reserves to pay for them, triggering a reduction in benefits. But this crisis wasn’t inevitable. The pull back in unemployment benefits is just another result of state-level choices to cut taxes at the expense of state spending, spending that could be cushioning the blow of the Great Recession.
States are unable to adequately finance their unemployment insurance programs just when they are most needed not because they were unexpectedly overwhelmed. As a new report from the National Employment Law Project shows, it was because they failed to finance them during the good times like they’re supposed to. Here’s the way it works: federal law requires each state to collect unemployment insurance contributions from employers and deposit them into a state trust fund held in the treasury. During good times, the trust funds accumulate reserves so that claims can be paid out during downturns. This makes the program countercyclical, helping to pump money into workers’ pockets and therefore businesses (via their spending) when times are tough.
The problem is that employer contribution rates vary among and even within states. Not shockingly, business groups turn on political pressure to reduce employer contributions and taxes during good times before the coffers are adequately full. And too many states gave in to this temptation before the recession. As the report notes, “Thirty‐one states reduced UI taxes by at least 20 percent between 1995 and 2005.” Meanwhile, from 2000–09 the average UI contribution rate was .65 percent of total wages, “the lowest in the life of our federal‐state UI program.” That left many of the reserves underfunded, especially when they were called upon to respond to the financial crisis.
And now, of course, the demand for these benefits is at a historically high levels. So what have states done to address the fact that they don’t have the funds to pay them out? The solutions “have tended to focus more on curtailing and reducing benefit payments than on the revenue side of the equation,” the report says. That is, rather than looking at ways to hike taxes or employer contributions to make up the shortfall, most states have cut back on benefits for the unemployed.
Over the past thirty years, lawmakers have eroded long-standing features such as the duration of benefits that were “previously seen as untouchable,” and today’s responses follow that trend. Six states have reduced the maximum duration of benefits below twenty-six weeks, which has been the standard since the 1950s. Other states have put up barriers to benefits, like drug testing requirements and excluding seasonal workers. Several states and even the federal government have limited the number of unemployed workers who qualify, forced skilled workers to accept low-wage jobs and lowered the value of payments. Meanwhile, most states did nothing to raise revenues or “passed token policies that will raise a negligible amount of revenue”—the only states to buck that trend were Colorado, Rhode Island and Vermont.
This may sound familiar. That’s because tax cuts have gotten in the way of other important policies at the state level. As Mike Konczal and I showed earlier this year, a handful of ultraconservative state governments were responsible for the massive wave of public sector job losses the country has experienced during the recovery. But layoffs weren’t the only option for dealing with tight state budgets: many of these states also cut corporate taxes or taxes on high-income earners (or both). Estimates have shown that without these job losses, unemployment would likely be a full percentage point lower than what it is now.
And there’s another fiscally irresponsible choice a number of states have said they’ll be making soon: the refusal to expand Medicaid as part of the Affordable Care Act. The Supreme Court ruling that upheld the law struck down the part that would have all but ensured across-the-board participation, and now at least fifteen governors are indicating that they’ll opt out—despite the fact that the federal government will pick up the tab for the full price of expansion in the early years and 90 percent after that. One study even found that the expansion could actually end up saving these states money. But even if that didn’t pan out, Richard Kim recently made a clear case that there are some pretty painless ways for these states to find the money to expand Medicaid. The only catch? They require raising taxes. Either by undoing some unnecessary tax breaks or raising taxes modestly, the states that are threatening fiscal ruin at the hands of this mandate can actually easily afford what it’ll cost them. Small price to pay when Medicaid saves lives.
So-called “tough choices” aren’t always so tough. Some of the policies that are exacerbating the effects of the recession and hurting the most vulnerable among us have been implemented because states refuse to look at the revenue side of their ledgers. The choices to lower taxes or ignore raising them aren’t made in a vacuum. There are often painful consequences, borne by those who can least afford it.
By: Bryce Covert, The Nation, August 6, 2012
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