Extend Unemployment Benefits
The Senate's stonewalling of unemployment benefits extension makes no sense.
Senate Republicans are successfully filibustering an extension of unemployment benefits unless they’re offset by spending cuts. Enough Democrats, most outspokenly Ben Nelson, are joining in to prevent moving to cloture.
I’m sympathetic to the notion that we need to constrain government spending. But this seems a particularly cruel bill on which to make that stand. And, aside from the “but Republicans support tax cuts for the rich while railing against deficits” canard, there are all manner of more expensive, wasteful programs to cut.
I’m also sympathetic to the philosophical objections. There’s simply no question, as Daniel Hamermesh points out that we have “huge amounts of research showing that extending the potential duration of unemployment benefits creates an incentive for the unemployed to search less and remain unemployed longer.” How could it not?
But, as he points out, “most of the research describes behavior in average economic times, not when the unemployment rate is 9.5%. What little research is available suggests smaller effects when there are fewer job vacancies.” And, needless to say, there are fewer job vacancies right now. The world economy has been in the toilet for two years now and there are strong signs things will get worse before they get better.
The Atlantic‘s David Indiviglio presents what he reasonably titles “A Chart That Screams, ‘Extend Unemployment Benefits!’”
For those who prefer words to pictures:
At the end of May there were 3.2 million job openings, according to a new report from the Bureau of Labor Statistics. In the face of nearly 15 million unemployed, that’s obviously not enough. And if you add in those other Americans not working because they’re discouraged or marginally attached (“U-5”), then that number jumps to almost 17 million.
WaPo’s Michael Fletcher (“No unemployment extension: Benefits not in sight for the long-term jobless“):
[There are] 1.4 million workers who have been unemployed for at least 99 weeks, according to the Labor Department, reaching the limit for the insurance. Their numbers have grown sixfold in the past three years.
The 99ers are glaring examples of the nation’s most serious bout of long-term joblessness since the Great Depression. Nearly 46 percent of the country’s 14.6 million unemployed people have been out of work for more than six months, and forecasters project that the situation will not improve anytime soon. Currently, the Labor Department says there are nearly five unemployed people for every job opening.
Are there people out there who are, as Cato’s Michael Turner says in the piece, “less likely to look for work, or accept less-than-ideal jobs, as long as they are protected from the full consequences of being unemployed”? No doubt. But they have to be an infinitesimal fraction of the overall number. There simply aren’t enough jobs going around.
This will become a Republican albatross at some point at which time look for them to start demanding Democrats pass an extension of unemployment benefits. When will this happen? Probably around labor day when the country emerges from it’s soporific summer sojourn.
I am currently drawing unemployment and have been searching for a job for the past few months with very little sucess until very recently. However, I feel extending unemployment benefits needs to be paid for. Republicans asked the Democrats to use the Stimulous money. Why not use TARP money? At some point the bill has to be paid. Democrats want to blame Republicans for this situation. If we go back to the election of 2006, it is a little easier to find out who is responsible. Fact is we cannot have this many people on unemployment continuously while the government is doing what it is doing to the job market.
Zelsdorf Ragshaft III says:
“Fact is we cannot have this many people on unemployment continuously while the government is doing what it is doing to the job market.”
You’re obviously pining for the days when we were losing 750,000 jobs a month.
For something to be a “canard” it should be technically false.
Off topic, but why do you think “the “but Republicans support tax cuts for the rich while railing against deficits” canard” a canard? Do you think that it is not a true statement of the position of Congressional Republicans? Do you think extending the tax cuts will not increase the deficit by orders of magnitude more than extending unemployment benefits?
Do you think extending the tax cuts will not increase the deficit by orders of magnitude more than extending unemployment benefits?
I don’t think we know what the effects of the tax cuts are. Higher taxes disencentivize productivity and incentivize finding ways around the system, so it’s not a 1:1 ratio. Whether raising taxes nets money isn’t a constant and depends on events outside the control of those setting the rates.
We know what first order results are. At the first order cutting unemployment benefits hits the poor. At the first order holding down taxes at the high end benefits the rich. Second and third order arguments about follow-on effects do not change that.
And FWIW, those second and third order arguments are much harder to prove.
At the first order cutting unemployment benefits hits the poor.
Well, not only the poor. Indeed, the problem now is that many higher end jobs have gone away. Unemployment benefits are mostly about keeping Americans out of poverty, not helping those already there.
At the first order holding down taxes at the high end benefits the rich. Second and third order arguments about follow-on effects do not change that.
Aside from the ongoing debate as to what constitutes “the rich,” the argument isn’t about whether the well-off benefit from keeping more of the money they earn but rather about whether raising their taxes nets more money for the Treasury.
You did recast the TPM headline slightly:
“GOP Says No To Unemployment Benefits, Yes To Tax Cuts For The Rich”
“Aside from the ongoing debate as to what constitutes “the rich,” the argument isn’t about whether the well-off benefit from keeping more of the money they earn but rather about whether raising their taxes nets more money for the Treasury.”
It does when you have top marginal rates in the 30-50 range. There’s a mountain of evidence to prove it. No one is arguing that max marginal rates in the seventies are a good thing but our two top marginal rates are currently 33% and 35%. Contrary to popular wisdom on the far right raising the two top bands to 36% and 39.6% will not provoke mass emigration amongst those with incomes greater than 200k. But then you know all this don’t you Jim.
Contrary to popular wisdom on the far right raising the two top bands to 36% and 39.6% will not provoke mass emigration amongst those with incomes greater than 200k.
Right. I’ve written as much many times: The Right has won this argument and we’re niggling within the range of Reagan’s numbers, not talking about a return to pre-JFK 90% or even pre-Reagan 70% numbers. I’m just saying that it’s not a given that a 3% hike will net anything like 3% because it does reduce incentives at the margins.
Further, one could take a hardline view that government is only morally allowed to take X% of people’s earnings and nonetheless think government should live within its means, thus requiring spending cuts. My argument is that, even within that rubric, unemployment ain’t the place to cut.
“I’m just saying that it’s not a given that a 3% hike will net anything like 3% because it does reduce incentives at the margins.”
But that’s very different than saying extending the tax cuts will not increase the deficit, which you are claiming you do not know the answer to.
I might restructure unemployment benefits is that they start high, and then tail off over a couple years. That every check is smaller should provide the “nudge” to get a job fast. And if you can’t, the smaller checks are a “nudge” to adjust your lifestyle.
The conservatives to hit a right note that “incentives matter” but they are wrong to think that a dollar at the low end has the same incentive as a dollar at the high end.
And extra $100 in unemployment benefits does much more to stimulate the economy than $100 less tax paid by a $200K per year wage earner. I’d hope the $200K guy wouldn’t notice a $2K change in tax. If he does, he’s living too tight.
sorry, my re-edits sometimes mess up my sentence flow
“I might restructure unemployment benefits [so] that they start high, and then tail off over a couple years.”
The deficit argument might hold a little more water if prominent Republicans like Senator Kyl hadn’t publicly stated that unemployment benefits were a “disincentive” for the unemployed to find work. There’s no good way to translate that statement into anything but “you lazy bums just want to sit on the couch and collect a freebie.”
So, the guy whose household economy is based on the $2K a month he used to make collects just about enough unemployment to keep the lights on and not starve while he goes through foreclosure and he’s just sitting around enjoying all that largesse. Really?
Right Grampa, Senator Kyl makes the cartoon version of an incentives argument. It’s black and white. People with benefits don’t seek jobs, etc.
What’s probably closer to the truth is that people who sign on say “ok, now I have x weeks.” That’s good and bad. Good that they have a sense of safety and don’t completely shut down on spending. Bad in that they might search less in the first weeks than the last.
What we want is a system that gives the safety, encourages job-seeking, but doesn’t drop the “honestly failed” job seekers.
“I’m just saying that it’s not a given that a 3% hike will net anything like 3% because it does reduce incentives at the margins.”
Jim we’re basically on the same page but actually there is quite a bit of evidence that top marginal rates in the forties don’t discourage economic expansion and that receipts actually rise at a faster rate than GDP. The classic case is the 90’s.
Mr. Joyner: Yes, you could make a hard line argument that the government is only morally allowed to X percent of anyone’s earning. You could also make a hard line argument that the government is morally obligated to stone to death any woman who has sex outside of marriage or that it is morally obligated to protect the right of white landowners to own minorities as slaves. The fact that one can make a hard line argument and claim it is based in morality is meaningless. The country is falling apart because there is too little money to pay for the spending the people want. That can be addressed in several ways, but to claim a moral imperative for not taxing the rich while assuming there is no moral judgments involved in letting the bottom 90% suffer reduces the notion of philosophy to yet another tool for propping up the ruling class.
What’s probably closer to the truth is that people who sign on say “ok, now I have x weeks.” That’s good and bad. Good that they have a sense of safety and don’t completely shut down on spending. Bad in that they might search less in the first weeks than the last.
Although that depends on the level of job seeker. Minimum wage workers might well do that, on the theory that their check is coming close to covering their needs. Those trying to replace higher end jobs, though, are given assistance to hold out longer while trying to recover something like their old position rather than forced to take whatever job comes along to feed themselves.
I’m not sure that’s a bad thing. Taking a “get by” job not only makes it hard to look for a good one — high end job searches are akin to a full-time job — but also screws up your resume, likely depressing your future wages as well as current wages.
Taking that “get by” job can backfire badly, leaving one without a job and without unemployment checks. This is another incentive for holding out for the best deal possible.
Sadly, we could see this play out against an aging demographic and structural unemployment. That is, older workers could hold out for jobs that are not there.
BTW, Ezra Klein has been on fire on this topic today. Start with this, but check out the rest of his pieces today.
Matt Yglesias has a good article on this as well.
Yglesias is talking out of both sides of his mouth with that TP post. He may think the GOP is not serious at all about deficit reduction, but he can’t let go of the cudgel that allows him to bash the GOP for being heartless when they speak about deficit reduction. So there you go.
As for extending unemployment benefits goes, and whether or not it’s prudent to take them while holding out for a job that paid what your old job did, we frankly need to realize that we’re getting to a point where the laid-off have to restart somewhere. Especially if you’re, say, 58, and need something to bridge the gap between the present and Social Security/401K. Maybe this refusal to extend the benefits again (for which the GOP will pay NO POLITICAL PRICE) is a means of pressing the issue of getting as much of the workforce back to work as possible, at anything that is available.
Brad S: How is MY talking out of both sides of his mouth. On the one hand he says that the GOP is being heartless when they speak about deficit reduction while on the other hand he says they’re not serious about deficit reduction. Both are true. They claim they care about reducing the deficit, but only when it comes to punitive measures against the poor and struggling. When they want to give massive tax cuts to themselves and their rich friends, they don’t care at all about the effect on the deficit.
And now that I’ve cleared that up for you, maybe you can explain something to me: In an economy where there are six seekers for every job opening, how exactly will depriving the unemployed benefits get them back to work faster? What are these jobs that they’ve been refusing to take?
“Matt Yglesias has a good article on this as well.”
Yglesias’ conclusion is basically my conclusion. After a lifetime in business basically supporting Republicans we’ve now got a situation where they are not to be trusted with the purse strings. They aren’t really interested in fiscal responsibility and had no interest in propping up the economy when it was in dire straits last year. It pains me to say it but it’s true.
@Zels
“I am currently drawing unemployment and have been searching for a job for the past few months with very little sucess until very recently”
You mean Loony Toons called back?
For those interested here are the numbers in constant dollars (central columns) on federal receipts and outlays. McConnell and Kyl are still claiming the Bush tax cuts paid for themselves so it hard to know whether they’re economically illiterate or just lying.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200
“(for which the GOP will pay NO POLITICAL PRICE) ”
Wanna bet?
Brummagem,
““(for which the GOP will pay NO POLITICAL PRICE) ”
Wanna bet?”
I’ll take that bet. Given the way the so-called liberal media has failed to mention any of MY’s points when Republicans talk about the need to cut spending to pay for the unemployment benefits, I expect that only political junkies will ever recognize the R’s blatant double standards on the deficit.
ZR: You’ve been collecting unemployment for some number of months. Has this stopped you from looking for a job? Have you decided you’d rather keep sucking off the gov than get out there and get to work? If not, I wonder why you immediately assume that about all the other people who are in your situation…
“I expect that only political junkies will ever recognize the R’s blatant double standards on the deficit.”
The 17 million unemployed and their families and friends certainly are aware it’s the Republicans that are blocking extending unemployment benefits while calling for tax cuts on the rich.
The 17 million unemployed and their families and friends certainly are aware it’s the Republicans that are blocking extending unemployment benefits while calling for tax cuts on the rich.
They’re apparently innumerate, then. There are only 39 Republicans in the Senate.
I’m sure semantics mean very little to the long term unemployed.
“There are only 39 Republicans in the Senate.”
Which two Republican Senators are you excommunicating, btw?
“I expect that only political junkies will ever recognize the R’s blatant double standards on the deficit.”
Let’s wait til Labor Day and see if that’s still true.
“They’re apparently innumerate, then. There are only 39 Republicans in the Senate.”
So why are they preventing an up or down vote?
Democrats: 56 (minus Ben Nelson for all intents and purposes)
Republicans: 41(enough to filibuster perpetually)
Independents: 2
Vacancy: 1
Is this really James? An intern? Outsourcing to India?
(Surely James would know that the filibuster threat has blocked the benefits.)
Surely James would know that the filibuster threat has blocked the benefits.
Nah, just did the math wrong on the Mass special election. I was under the impression a handful of Dems were going along? Ben Nelson?
“Nah, just did the math wrong on the Mass special election.”
So you’re innumerate Jim? hoho