North Carolina Gov. Pat McCrory (R) today signed a law that imposes severe cuts to his state’s unemployment insurance program, a change that will also cost jobless workers in the state access to the federal unemployment compensation program.
McCrory’s signature earned him a rebuke from the National Employment Law Project, which said in a release that the law will result in “the most severe cutsto both state and federal unemployment insurance of any state in the nation”:
These heartless cuts, in the state with the fifth-highest jobless rate in the nation, at 9.2 percent, show a shocking disregard for 400,000 unemployed North Carolinians and their families, many of whom will now go from struggling to barely make ends meet to outright struggling to survive. The immediate pain of these cuts will fall on North Carolinians unfortunate enough to lose work through no fault of their own in a weak economy where jobs are scarce. But the entire state will take a hit from the loss of hundreds of millions of dollars in spending at local businesses that would’ve boosted the local and state economies.
The law reduces the maximum benefit allowed from $535 a week to $350 while cutting the number of weeks an unemployed worker is eligible for the program from 26 to 20. As a result, 170,000 jobless North Carolinians will also lose access to $780 million in federal unemployment funds. The average unemployed worker in the United States has been off the job for 35 weeks, meaning many jobless workers will now face the prospect of searching for a new job without access to a safety net program.
Republican state senators have touted the law as “re-employment” program, even though research suggests that workers who receive unemployment benefits search harder for jobs than those who don’t. McCrory, meanwhile, praised the fiscal responsibility of the law, which will allow North Carolina to pay back money owed to the federal government a measly three years earlier than it would have under the old program.
In an effort to drastically reduce the welfare rolls and make it more difficult for struggling families to receive government benefits, GOP governors and legislators have pushedmandatory drug testing laws. Not only do welfare recipients have to pass drug tests before they can collect benefits, they often have to pay for the test themselves, and will only be reimbursed by the state later if they pass.
The bill by Rep. Jack Kingston (R-Ga.) would require unemployment claimants to pass a drug test if they are identified in an initial screening as having a high probability of drug use.
The proposal comes as Congress is mulling a reauthorization of federal jobless benefits for people out of work six months or longer. House Republicans have been drafting legislation, but the details have not been released. [...]
On Thursday morning, [spokesman for Speaker John Boehner (R-OH) Michael] Steel told HuffPost in an email he didn’t know whether the forthcoming unemployment legislation would include Kingston’s drug testing idea. A spokesman for the Republican leader of the House Ways and Means committee, which oversees unemployment insurance, could not confirm details of the bill.
Steel said on Wednesday that Republicans are looking to “reform” unemployment insurance before they will reauthorize benefits that are set to expire at the end of the year.
Despite their unwillingness to raise taxes on millionaires and billionaires, Republicans have been reluctant to extend unemployment insurance and the payroll tax break that middle class families depend on more than ever. President Obama has noted that if Republicans vote no, middle class families will have to pay an additional $1,000 in taxes next year.
Earlier this year a federal judge halted Florida Gov. Rick Scott’s (R) mandatory drug testing policy on constitutional grounds. Only 2.5 percent of welfare applicants failed the test, which Huffington Post notes is “a far lower rate of illicit drug use than the national average of 8.7 percent.”
Rush Limbaugh claimed that "there is no stimulative effect of unemployment benefits." But economists agree that unemployment benefits do have a strong effect on job creation and growth.
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Limbaugh Claims Unemployment Benefits Have "No Stimulative Effect"
Limbaugh: "There Is No Stimulative Effect Of Unemployment Benefits -- None Whatsoever."From the August 30 edition of Premiere Radio Networks' The Rush Limbaugh Show:
[T]his regime, from Pelosi to any number of people, try to make the claim that unemployment benefits stimulate the economy. Jay Carney even said, "Oh yeah, I mean, it really works out there, you putting money in people's pockets that they're gonna go spend, they're not ganna save it. And so, yeah, it'll stimulate the economy."
Where does the money come from? You have to take it away from somebody before you give it to somebody else. It's a wash. There is no stimulative effect of unemployment benefits -- none whatsoever. Whether you borrow the money, or print it, or get it via taxes, you still have to take it from some place in the private sector to give it to somebody else in the private sector. It zeros out. And probably is a net negative because it also has the added benefit of promoting laziness, slothfulness. The longer you pay people not to do anything, the longer they'll not do anything. [Premiere Radio Networks, The Rush Limbaugh Show, 8/30/11]
But Economists Agree That Unemployment Benefits Have A Strong Effect On Job Creation And Growth
Dean Baker: Unemployment Insurance "Stimulates The Economy" By "Put[ting] Money In ... [The] Pockets" Of People Who Are "Very Likely To Spend" It. In an email to Media Matters, Dean Baker, co-director of the Center for Economic and Policy Research, stated:
UI stimulates the economy for the same reason that tax cuts provide stimulus to the economy, they put money in people's pockets. However, UI benefits will provide more stimulus per dollar because they are going to people who we know are very likely to spend the money. A large portion of money paid out in tax cuts are likely to be saved, especially if they go to the wealthy. [Email to Media Matters, 8/30/11]
Mark Zandi Estimated That Extending Unemployment Benefits Provides Significant Stimulus. In 2008 congressional testimony, Mark Zandi, Moody's Economy.com chief economist and a former adviser to John McCain, ranked extended unemployment benefits behind only food stamps in terms of economic "bang for the buck." The Economic Policy Institute created the following graphic based on Zandi's figures:
[Mark Zandi testimony via Economy.com, 11/19/08; Economic Policy Institute, 10/22/08]
CBO Scored "Increasing Aid To The Unemployed" As The Highest-Scoring Policy Proposal To Stimulate Economy. In a January 2010 report on "Policies for Increasing Economic Growth and Employment in 2010 and 2011," the nonpartisan Congressional Budget Office (CBO) estimated that extending aid to the unemployed would have one of the strongest stimulative effects on the economy:
Policies that could be implemented relatively quickly or targeted toward people whose consumption tends to be restricted by their income, such as reducing payroll taxes for firms that increase payroll or increasing aid to the unemployed, would have the largest effects on output and employment per dollar of budgetary cost in 2010 and 2011. [CBO, 1/14/10]
According to a table in the report, CBO estimated that increasing aid to the unemployed would have the greatest effects on GDP per dollar of budgetary cost and the second highest cumulative effect on employment of the policy options considered.
WASHINGTON -- Gov. Rick Snyder signed controversial legislation on Monday, making Michigan the first state in the country to reduce unemployment insurance for those who lose their jobs through no fault of their own. Starting in January, laid-off Michiganders will be eligible for 20 weeks of jobless aid, instead of the standard 26 weeks.
Snyder, a Republican, said the change was necessary to win political support in the Michigan legislature for maintaining the state's eligibility for the federal Extended Benefits program, which provides 20 weeks of benefits for the long-term unemployed. Without the bill, an estimated 35,000 Michiganders would not have received their EB checks in April.
"These benefits are a lifeline for many Michigan families who are struggling in this challenging economy," Snyder said in a statement. "Cutting them off so abruptly would have jeopardized the well-being of those who are trying hard to find work."
EB kicks in for people who exhaust 53 weeks of federal Emergency Unemployment Compensation and 26 weeks of state benefits. Opponents of the bill say the EB measure was not worth reducing the state benefits. Advocates of unemployment insurance fear other states will follow Michigan's lead.
Michigan Democrats in the U.S. Senate and House of Representatives asked Snyder in a letter on Monday to veto the bill, saying the change would "turn back the clock on 50 years of needed protections for the unemployed in Michigan."
Daniel Ytterock of Redford, Mich. told HuffPost that he lost his job in publishing sales in July 2009 and is currently on the final tier of EUC. He said he doesn't love the deal, but that knowing he'll still be able to receive EB in the coming months gives him peace of mind.
"After so many months and years looking for a job, I don’t see any signs that looking for a job is going to get easier or more successful," he said. "I just feel bad for the others that follow after January."
Both federal programs are set to expire in January, and the Michigan Democrats wrote that there is "absolutely no guarantee they will be extended," meaning laid-off Michiganders could be left with just 20 weeks of benefits. "In 2010, over 171,000 individuals drew more than 20 weeks of regular UI benefits, with 130,000 of these drawing 26 weeks," the delegation wrote.
"There is no valid reason why keeping federally-financed Extended Benefits in place in Michigan should require a permanent reduction in the 26 weeks of unemployment benefits paid in our state’s UI program," Rick McHugh, a staff attorney with the National Employment Law Project, said in a statement. "The Governor’s actions today mean that Michigan will be the only state paying less than 26 weeks for their maximum duration of benefits in the U.S. Michigan has paid 26 weeks of benefits since 1954."
Many states are considering new laws to maintain eligibility for EB, which triggers based on unemployment patterns in the state over the previous two years. The legislation adjusts the trigger to look back three years instead of two.
The Michigan Chamber of Commerce lobbied against a standalone EB fix, arguing that further depleting the federal government's unemployment insurance trust fund would eventually result in higher unemployment surtaxes on businesses.
Motor City Liberal comment: Got a question for those who are unemployed and voted for Snyder and the Repugs. How does it feel now? For those who suffer from there's a Negro in the White House I'm mad syndrome how does it feel getting cut off at the knees by the very people you gave power to?
Sen. Orrin Hatch (R-UT) went on Fox News last night with host Greta Van Susteren to discuss the White House tax deal, which passed in the Senate yesterday afternoon. Hatch was largely supportive of the measure, which included an unpaid-for extension of the Bush tax cuts for the wealthy, but he was upset that the bill included an extension of unemployment insurance (UI) benefits because they were also not paid for. But in attacking the benefits extension, Hatch falsely claimed that UI currently lasts “well over 100 weeks,” and that jobless benefits encourage the unemployed not to look for work:
HATCH: I would prefer the insurance to be paid for, naturally. They weren’t going to pay for it. Let’s be honest about it — the Democrats have always won on unemployment insurance. It is well over 100 weeks now. There is no question people are suffering. I don’t want them to suffer.
On the other hand, we also know there are people who could be working who won’t work because they’ve got unemployment insurance and they keep — don’t go out and start looking, especially jobs that might not be as good as what they had before. So these are all things that had to be worked out.
Watch it:
It’s curious that Hatch has such a strong opinion on unemployment benefits, since he clearly doesn’t understand the program well. The length that UI benefits last differs between states, but nowhere in the country do benefits last “well over 100 weeks.” The maximum length of UI anywhere is 99 weeks, hence the so-called 99ers, people who have exhausted their benefits and have still been unable to find work. Fellow Republicans like Rep. Michele Bachmann (R-MN) have also railed against the extension of UI benefits in the tax bill while demonstrating they lack an elementary understanding of the program.
Meanwhile, Hatch’s claim that “there are people who could be working who won’t work because they’ve got unemployment insurance” is both false and offensive to people who are out of work. Research by the San Francisco Federal Reserve has found that workers who qualify for UI benefits stay unemployed for just 1.6 weeks longer than those who do not qualify for such benefits. Moreover, there is currently only one job opening for every five job seekers, meaning “even if every job opening were instantly filled with an unemployed worker, four out of five unemployed workers would still be looking for a job,” as the Center on Budget and Policy Priorities found.
And likemanyof his GOP colleagues, Hatch is upset that the UI benefits are not paid for, but has no problem exploding the deficit to lavish tax cuts on the wealthiest two percent of Americans, suggesting where his true priorities lie.
By Pat Garofalo
Yesterday, the Senate approved the tax deal that President Obama negotiated with Congressional Republicans by an 83-15 vote. The legislation now moves to the House, where Democrats are saying that they might tinker with the estate tax cut that Republicans are insisting upon.
But it isn’t only on the left that opposition to the deal exists. A few House Republicans have disparaged the deal for including too few tax cuts and too much help for the jobless. In a USA Today op-ed today, former Gov. Mitt Romney (R-MA) — who is consistently mentioned amongst GOP 2012 hopefuls — came to the same conclusion, saying that a two-year extension of all of the Bush tax cuts is too short, while a one-year extension of unemployment benefits is too expensive:
One thing is certain: While we cannot rebuild our flawed system [unemployment insurance system] overnight, we are surely not required to borrow the funds to pay for it. In spending $56.5 billion to extend benefits, the deal is sacrificing the bedrock Republican principle that new expenditures be paid for with offsetting budget cuts.
Romney also criticizes the deal’s payroll tax reduction for adding to the deficit. But then, in order to get around the fact that he favors permanent extension of the entire Bush tax cut package (at a cost of $4 trillion over the next decade), Romney asserts that such an extension will actually increase revenues:
In many cases, lowering taxes can actually increase government revenues. If new businesses, new investments and new hiring are spurred by the prospects of better after-tax returns, the taxes paid by these new or growing businesses and employees can more than make up for the lower rates of taxation.
As The Wonk Room explained, when it comes to the Bush tax cuts, revenue surely did not increase. Romney is simply twisting himself in circles to justify his opposition to the tax deal on fiscal responsibility grounds, while simultaneously advocating for a full extension of the Bush tax cuts, no matter their effect on the deficit.
At the end of November, unemployment benefits expired for 2 million Americans in the midst of the holiday season, thanks to repeated Republican obstructionism in the Senate. The White House tax compromise announced this week will extend these benefits for 13 months, but a number of Republicans are opposing the extension because it would increase the deficit, and are even threatening to scuttle the entire deal over aid for the jobless.
“I don’t think we need to extend unemployment any further without paying for it,” Sen. Jim DeMint (R-SC) told conservative talk radio host Hugh Hewitt Tuesday. “Thank you, @JimDeMint” former Alaska Gov. Sarah Palin tweeted yesterday in response. “Obviously Obama is so very, very wrong on the economy & spins GOP tax cut goals; so fiscal conservatives: we expect you to fight for us & America’s solvency,” Palin followed up in another tweet.
Of course, at the same time, these self-described “fiscal conservatives” have been demandinga permanent extension of the Bush tax cuts for the wealthy, which would add $830 billion to the deficit over ten years. The White House compromise only extended them for two years, at a cost of $120 billion. The unemployment extension would cost far less — only $55 billion.
Nonetheless, on Fox News host Sean Hannity’s show last night, Sen. John Thune (R-SD) joined DeMint and Palin, saying “we need” to pay for unemployment benefits, while completely ignoring the cost of the Bush tax cuts:
HANNITY: What do you think of what Jim DeMint and Governor Palin had said about this that, you know, we need to extend unemployment. We can’t do it without funding it. Number two, we don’t need temporary economy. We don’t need temporary tax rates, businesses need to look five, 10 years down the road. What do you think of that criticism?
THUNE: I don’t disagree with any of that. … But I do agree with what Senator DeMint is saying and that is we need to try and come up with a way to pay for this $55 billion extension of unemployment benefits. We will be offering amendments in the Senate to do just that.
Watch it:
Of course, Thune did not say he would offer an amendment to pay for the Bush tax bonus for the rich. As the Wonk Room’s Pat Garofalo noted yesterday, “Unemployment benefits are providing a vital lifeline to millions of Americans struggling in a weak economy,” but Thune, DeMint, and their cohorts “would cut them off, while lavishing tax breaks on the wealthy.”
For the past year, conservatives have usedspecious, callous, and occasionally offensivearguments against extending unemployment benefits for jobless Americans, but former Delaware GOP Senate nominee Christine O’Donnell took this hyperbole over the top last night. O’Donnell is forming a new issues-oriented political action committee called “Christine PAC,” and at a launch event for the group in Virginia yesterday, O’Donnell called the extension of jobless benefits a “tragedy,” comparing it to Pearl Harbor and the death of Elizabeth Edwards:
“Today marks a lot of tragedy. … Tragedy comes in threes,” O’Donnell said. “Pearl Harbor, Elizabeth Edwards’s passing and Barack Obama’s announcement of extending the tax cuts, which is good, but also extending the unemployment benefits.”
O’Donnell continued: “The reason I say this is a tragedy is because his announcement of economic recovery was more of a potpourri of sound bytes. It’s like he took a little bit of what each party wanted and put it together. It’s not a solid plan constructed on sound economic principles.”
O’Donnell immediately tried to walk back her characterization of unemployment benefits as a “tragedy,” telling reporters after her remarks, “That’s not what I meant at all.” “If we’re going to extend the jobless benefits we have got to cut spending programs and that’s the flaw in his announcement,” she said. “That’s the tragedy.”
O’Donnell, who has spent much of her adulthood unemployed, appears to have avoided collecting unemployment insurance herself thanks to her perennial campaigns for public office. “Staffers on her previous campaign for Senate and O’Donnell’s own financial filings reveal that the unemployed O’Donnell used campaign funds to pay for meals, gas, bowling trips, and personal rent, even long after the campaign had ended,” CBS reported in September. Indeed, her use of campaign funds for personal expenses — she even used donations to purchase a mattress — drew scrutiny fromU.S. Attorney’s office and the FEC. But not everyone can repeatedly run for office to subsidize their unemployment.
As ThinkProgress noted yesterday, a number of leading Republicans are vigorously opposed to the 13 month extension of jobless benefits included in the tax compromise between the White House and congressional Republicans, and are even threatening to oppose the entire package because of it.
As part of his tax deal with Congressional Republicans, President Obama managed to wring out of the GOP a 13 month extension of unemployment benefits. For months, Republicans have made each extension of benefits a protracted, drawn-out fight, even with unemployment above nine percent and five unemployed job-seekers for every job opening. Sen. Jim Bunning (R-KY) even stayed on the Senate floor until late in the evening to personally block extending benefits, telling those asking him to relent “tough sh*t.”
Senate Minority Leader Mitch McConnell (R-KY) said yesterday that the “vast majority” of Republican senators would support the tax deal. But one who has come out with vocal opposition is Sen. Jim DeMint (R-SC), who takes exception to the fact that the jobless benefits extension is unpaid for. “I don’t think we need to extend unemployment any further without paying for it,” he told conservative talk radio host Hugh Hewitt yesterday.
Of course, DeMint has proposed permanently extending all of the Bush tax cuts without paying for a dime of it, adding $4 trillion in deficits over the next ten years alone. But according to DeMint, the problem with unemployment benefits is that they amount to “paying people to stay home,” as he told South Carolina’s News 13:
The senator also said extending unemployment benefits that aren’t paid for isn’t helping add new jobs. “We can’t just keep paying people to stay at home,” said DeMint. “We’ve got to create economic activity to allow businesses to grow so they can hire people.”
Watch it:
As The Wonk Room noted, DeMint is hardly alone amongst his GOP colleagues in perpetuating the myth that jobless benefits encourage people to stay out of work. But research by the San Francisco Federal Reserve has found that workers who qualify for UI benefits stay unemployed just 1.6 weeks longer than those who do not qualify for such benefits.
Unemployment benefits are providing a vital lifeline to millions of Americans struggling in a weak economy, but DeMint would cut them off, while lavishing tax breaks on the wealthy. And it seems that DeMint would find some sympathetic ears amongst House Republicans, as a handful of them have said that they will oppose the tax deal because it has too few tax cuts and too much help for the jobless.
At 12 a.m. this morning, extended unemployment benefits officially expired, meaning that 2.5 million Americans will see their benefits disappear by the end of the month. This will not only hurt the individual families — while unemployment is still above nine percent and there are five job seekers for every job opening — but will also harm the wider economy. Economists estimate that allowing benefits to expire could cause economic growth to “fall by one half to nearly 1 percentage point,” as well as throw hundreds of thousands of people into poverty.
Cutting off benefits will also negatively affect small businesses, because, as MarketPlace noted, “when unemployment checks stop, it’s felt right away by businesses like gas stations, apartment operators, and grocery stores.” But Republicans in Congress have been screaming that the country can’t afford to extend benefits unless they are offset with spending cuts elsewhere.
Of course, these same Republicans have no problem extending the Bush tax cuts for the wealthy without corresponding spending cuts. And today, on MSNBC, Rep. Mike Pence (R-IN) — who has been serving as House Republican Conference chairman and is being touted as a possible 2012 Presidential nominee — twice refused to endorse extending unemployment benefits if it meant that taxes went up on only millionaires:
HALPERIN: If your leaders came to you and said ‘we have a deal with the White House. We’re going to extend unemployment benefits but the tax cuts for people making over a million dollars a year will not be extended, but that helps to pay for it,’ would you take that deal? Would you vote for that package?
PENCE: Look, I think the worst thing you could do for people that are struggling in this economy and looking for a job is raise taxes on any American. We don’t want to help with one hand and take away with the other.
HALPERIN: So would rather extend the tax cuts for every American, including those making over a million, or have the unemployment benefits extended, if that’s the choice?
PENCE: This isn’t a corner, but I feel the paint. I’m good. Nice move. I played chess with my son the other day and I lost, so I’m not good at this chess thing. Let me tell you, I think the minimum we have to do for Americans right now that are struggling in unemployment in this economy is make sure no American sees a tax increase.
Watch it:
As The Wonk Room pointed out, the average millionaire will receive $103,809 in tax breaks next year if the Bush tax cuts are extended. Unemployment benefits, meanwhile, average about $290 per week.
Unless Congress acts today, unemployment benefits will expire for 2.5 million Americans, with unemployment above nine percent and five unemployed workers competing for every available job opening. If Congress, as expected, does nothing, this will be first time in the last forty years that benefits have expired with unemployment so high.
According to calculations by the Congressional Budget Office, Moody’s Economy, andmyriad othereconomists, unemployment benefits are the single best way to pump money into the economy and generate economic activity, as the unemployed are very likely to spend all of the benefits they receive (thus moving money into local businesses). But during an interview with MSNBC’s Mike Barnicle today, Rep. John Shadegg (R-AZ) scoffed at the notion that unemployment benefits help the economy. “Unemployed people hire people? Really? I didn’t know that,” Shadegg jeered:
BARNICLE: What about the fact that unemployment benefits pumped into the economy are an immediate benefit to the economy? Immediate…
SHADEGG: No, they’re not! Unemployed people hire people? Really? I didn’t know that.
BARNICLE: Unemployed people spend money Congressman, ’cause they have no money.
SHADEGG: Aha! So your answer is it’s the spending of money that drives the economy and I don’t think that’s right. It’s the creation of jobs that drives the economy…Actually, the truth is the unemployed will spend as little of that money as they possibly can. Job creators create jobs.
BARNICLE: Have you ever been unemployed? Have you ever been unemployed?
SHADEGG: Yes, I have.
BARNICLE: What did you do with the money? Save it?
Watch it:
At the same time that he was dumping on the unemployed, Shadegg called for extending all of the Bush tax cuts without paying for them, joining a slewof Republicanlawmakers who care more about tax cuts for the very wealthy than unemployed Americans about to lose the last strand of safety net that they have available.
Shadegg never managed to explain why all of the job creators he cites would create any jobs if households aren’t spending money. In that vein, MarketPlace noted today that “when unemployment checks stop, it’s felt right away by businesses like gas stations, apartment operators, and grocery stores.” And as the Center for American Progress’ Heather Boushey and Jordan Eizenga found, “the workers losing benefits have an average weekly benefit of a little over $290 per week, which translates into a total loss of about $2.5 billion dollars in benefits over December. This is equal to about one in seven dollars of the gain in retail sales seen between December 2008 and December 2009.”
As The Wonk Room noted, some economists estimate that allowing benefits to expire could cause economic growth to “fall by one half to nearly 1 percentage point,” as well as throw hundreds of thousands of people into poverty. And while Shadegg joked that he will be unemployed come January since he is retiring from Congress, next year he will be eligible for a federal pension (if he opted for one), as he is turning 62 and served on Capitol Hill for more than five years.
At the same time, Congress is intensely debating whether or not to extend the Bush tax cuts for the richest two percent of Americans, at a cost of $830 billion over the next decade. Earlier this week, Rep. Michele Bachmann (R-MN) called for a permanent extension of the tax cuts for the rich, while deriding extending unemployment benefits as “some new massive spending.”
And in an interview with Minnesota Public Radio, the incoming chairman of the House Education and Labor Committee, Rep. John Kline (R-MN), pronounced that extending benefits is not a priority for the incoming Republican Congress because “we can’t fund everything.” “We just don’t have the money,” Kline said:
KLINE: That’ll be a tougher lift in the 112th Congress. We’ve had unemployment benefits be extended for almost two years in some states, a little bit less in Minnesota. When you’re running a one and a half trillion dollar deficit per year, that’ll be part of the discussion as to whether that’s a priority for how we’re going to spend money. I would just reiterate what I said earlier, that the obligation for the Congress is to look at the entire budget and recognize that we’re borrowing over forty cents of every dollar that we spend, and say what are the priorities going to be. We can’t fund everything.
Q: But what do you tell those folks hanging on by a thread who really need those benefits?
KLINE: Well, they, heh, the best thing to do for them is to get the economy back on track and get businesses hiring so that they have a job that they can go to. We simply don’t have the money to keep extending unemployment benefits indefinitely. We just don’t have the money.
Listen here:
Kline also supports extending the Bush tax cuts for the rich. So in his world, $830 billion to finance tax cuts for the wealthy is fine, but $12.5 billion to extend unemployment benefits for three months is too expensive.
Rep. Mike Pence (R-IN) is also a part of this crowd, supporting a full extension of the Bush tax cuts, but saying today, “we’re facing a fiscal crisis. If we’re going to choose to extend unemployment, we’ve got to find a way to pay for it.” Rep. Charles Boustany (R-LA) added, “we can both provide this help and pay for it by cutting less effective stimulus spending. That’s what we should be debating today.”
In the last forty years, the U.S. has never allowed extended benefits to expire with the unemployment rate above 7.2 percent, far below today’s rate of 9.6 percent. Plus, there are currently five unemployed persons for every job opening in the country. In fact, there are so few job openings, that even if every open position in the country were filled, four out of five unemployed workers would still be out of work. But for Kline and the other House Republicans, extending tax cuts for the rich is much higher on the priority list then ensuring that these households have an adequate safety net.
M.C.L Comment: I wonder how many people that depended on these benefits either stayed home or decided to send the Democrats a message by voting Green or Repug? The Republicans got money for funding war and making sure Paris Hilton get a tax cut but if you're hard working American that lost their job and you need help from your government the Republicans say sorry we don't have money for you. Remember this in 2012 and vote these Republican slime balls out.
By Tanya Somanader
As Congress launches into the lame duck session, congressional Republicans are demanding an extension of all the Bush tax cuts, even for the wealthiest two percent of Americans, at an added cost to the deficit of $830 billion over the next ten years. Meanwhile, they have refused to support a continuation of
This morning, in an interview with Tea Party Caucus leader Rep. Michele Bachmann (R-MN), ABC’s Good Morning America host George Stephanopoulos picked up on the discrepancy between caring about the deficit when adding to it helps the poor, but not when it helps the rich. Asked if she would support a compromise which extended both the tax cuts and the unemployment benefits, Bachmann said no, characterizing letting the tax cuts expire as a “massive tax increase,” while dismissing extending unemployment benefits as “massive spending”:
BACHMANN: As far as a compromise goes, I want to get the current tax policy as far into the future as we can, if we can only get it extended for two years, that’s great. But I don’t think the American people should have to pay for that to have some new massive spending tied to it. If that’s the case, I don’t think you’re going to see the Republicans go along with it.
STEPHANOPOULOS: But why is it OK for the wealthiest Americans earning over $250,000 a year — remember the President has called for extending all tax cuts for those under $250,000 — for them to get tax cuts extended but for people out of a job and needing unemployment benefits not to have their benefits extended?
BACHMANN: Well remember again what this is. It’s a massive tax increase and its on the people who are job creators. And people want to think that these are millionaires sitting in leather chairs lighting their cigars with $100 bills, that’s not what we’re talking about. These are people who are carpet layers who may be employed two or three other guys, or a plumber, maybe himself and his brother, and it’s $250,000 in gross sales for their business. Their the ones looking at massive tax increases. …That’s going to hurt more people than anything if we can’t have job creation. And this is a job killer if we raise taxes on the job creators.
Watch it:
Bachmann’s argument for tax extension is, in one word, “bogus.” As the Wonk Room’s Pat Garofalo points out, conservatives’ claim that the tax increase will hurt small businesses is “only accurate if you take an incredibly expansive view of what constitutes a small business.” In reality, “exceedingly few small businesses” would actually be affected by letting the tax cuts expire. Meanwhile, the cuts represent “the least effective tax or spending step for job creation,” according to the Congressional Budget Office (CBO). Every dollar spent extending the tax cuts results in just 10 cents to 40 cents of economic activity, the CBO found.
Unemployment extension for those seeking jobs, however, represents the biggest bang for the buck of any government stimulus policy. According to the CBO, “the economy would see output rise by between $0.70 to $1.90.” That is part of the reason why an overwhelming majority of Americans support extending unemployment benefits for more than 2 million Americans in need, regardless of its effect on the deficit.
By Zaid Jilani
Earlier this week, the Senate finally voted 60-40 to extend
unemployment insurance for the millions of Americans who are unable to find work due to the poor economy. One senator who voted against extending these benefits was Sen. Ben Nelson (D-NE), who cited the deficit as his reason for opposing an extension. He gave the following statement to the press:
“I support extending unemployment benefits for Nebraskans and Americans who remain out of work. However, I opposed the Senate’s unemployment bill today because it should have, and it could have, been paid for.
“I oppose another $33 billion in deficit spending and increasing the debt. The six-month extension of unemployment benefits is a priority that can and should be funded. Some of the $70 billion in offsets included in earlier proposals could have been used to offset the $33 billion in new spending in this bill.”
However, today Nelson came out for extending the Bush tax cuts for the wealthiest Americans. While the senator cites the cost of extending unemployment benefits for Americans who are down on their luck and unable to find work as a reason to oppose extending unemployment insurance, he is endorsing massively expanding the deficit by extending Bush’s tax cuts for the richest Americans. Extending unemployment benefits has a relatively tiny budgetary cost of $33 billion, but extending the Bush tax cuts for one year alone would add $115 billion to the federal budget deficit. Effectively, the senator is not standing up for fiscal discipline — he is standing up for the richest Americans over those who are the worst off.
Update Nelson also voted for Jim DeMint's (R-SC) attempt to permanently repeal the estate tax.
By Zaid Jilani
Today, the Senate extended unemployment benefits for millions of jobless Americans. Despite the terrible shape of the economy, conservatives resisted extending unemployment insurance for weeks for Americans who can’t find work, launching a filibuster to prevent a vote on the benefits.
Writing at the American Spectator yesterday, former Nixon speechwriter and TV personality Ben Stein downplayed the suffering unemployed Americans are experiencing by writing that the people who are unemployed right now are “generally people with poor work habits and poor personalities.” He claims the unemployed are Americans with “unpleasant personalities…who do not know how to do a day’s work“:
The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities. I say “generally” because there are exceptions. But in general, as I survey the ranks of those who are unemployed, I see people who have overbearing and unpleasant personalities and/or who do not know how to do a day’s work. They are people who create either little utility or negative utility on the job. Again, there are powerful exceptions and I know some, but when employers are looking to lay off, they lay off the least productive or the most negative. To assure that a worker is not one of them, he should learn how to work and how to get along — not always easy.
Of course, saying that the 15 million Americans who are unemployed right now are “generally” people with “poor work habits” is as offensive as it is wrong. The current recession is a global phenomenon caused by the collective bad behavior of the world’s largest financial institutions. Before the recession, the unemployment rate hovered around six percent; it is ludicrious to say that millions of Americans suddenly got lazier and less able to work within the span of a few months.
Unfortunately, Stein is a widely respected voice on the American right who regularly appears on cable news to offer his thoughts on politics and policy. Using the Critical Mention media search engine, ThinkProgress finds that the name “Ben Stein” was mentioned 64 times in major television media networks within the past thirty days alone.
By Sahil Kapur
WASHINGTON – A Senate Democrat charged that the chamber’s GOP leader is compelling his colleagues to block the extension of unemployment benefits in an effort to prevent economic recovery and tarnish Democrats ahead of the November elections.
"I think there are some Republicans that want to vote for it who don’t, because [Senate Minority Leader] Mitch McConnell (R-KY) is putting so much pressure on Senate Republicans for President Obama and the Democrats to fail," Sen. Sherrod Brown (D-OH) told Raw Story and other reporters on a conference call late Monday afternoon.
"And it’s too bad that McConnell does that on the backs of … people that are really, really hurting," he added.
The call was part of a targeted effort by White House and Democrats to sharpen their attacks on Republicans ahead of a tough midterm election climate, in which Democrats are widely projected to lose seats in both chambers of Congress.
Brown accused Republicans of duplicity for arguing that unemployment benefits must be paid for in order to win their support.
They voted for Bush tax cuts for the wealthy, charged it to our grandchildren, didn’t pay for it," he said. They "voted for the giveaway or bailouts to drug and insurance companies in the name of Medicare privatization, charged it to our grandchildren, didn’t pay for it.
"And now they’re saying, because these are laid off workers who have done the right thing for most of their lives and now need some help, that we can’t provide it for them. It’s terrible public policy."
Some Republicans, such as Sen. Jon Kyl (R-AZ), have argued that offering relief to the unemployed discourages them from seeking a job and thus delays economic progress.
Sen. Jack Reed (D-RI) and economist Larry Mishel, president of the Economic Policy Institute, were also on Monday's call.
Speaking in the Rose Garden Monday, Obama delivered a similar rebuke to Republicans.
"The same people who didn’t have any problem spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn’t offer relief to middle class Americans," Obama said.
The jobless benefits package is up for another vote Tuesday.
"This is something we are going to get done tomorrow," Brown said
Republicans say the federal deficit can't bear the $33 billion cost of reauthorizing unemployment benefits, so the spending should be offset with cuts from another part of the budget. Democrats are dead-set against doing so and have rejected several GOP proposals to pay for the benefits by taking a chunk of money out of the 2009 stimulus bill.
To the 2.5 million long-term unemployed who have prematurely stopped receiving checks, the dithering deficit debate in Washington might seem a tad philosophical. As Senate Majority Leader Harry Reid (D-Nev.) put it on Monday, "They're trying to understand why at this pressing moment -- when jobs are harder to come by than at any other time in recent memory -- Congress can't get its act together to extend emergency insurance, just as we've always done with bipartisan backing."
Here's what's going on: Since the 1950s, to fight recessions Congress has routinely put in place federally-funded benefits to help people who can't find work before exhausting 26 weeks of state benefits. Democrats have said during the current debate that because Congress has never offset the cost of the benefits, doing so now would not only nullify the stimulative effect of giving money to people who immediately spend it, it would also fundamentally undermine unemployment insurance in the future. "If you say that you can't feed people because you don't have the money right now, that is a real new precedent," Rep. Jim McDermott (D-Wash.) told HuffPost.
The claim has gone largely unchallenged, but Sen. Jim Bunning, the Kentucky Republican who launched the GOP's deficit crusade back in February, says Democrats are wrong about offsetting benefits. "Historically that is untrue," Bunning told HuffPost. "Just do your homework. Go back and check historically what they've been doing."
HuffPost did its homework, and Bunning's got a point: Congress has, in fact, offset the cost of unemployment benefits -- but Congress has never substantially cut spending elsewhere in the budget to fully pay for them as Republicans now want to do.
For instance: In 1991, the elder President Bush signed a bill for 13 additional weeks of jobless benefits at a cost of $5.5 billion, fully offset with tax hikes. The New York Times reported at the time that the extension would be "financed through changes in the tax law that will require higher corporate estimated tax payments, increased taxes on lump-sum pension distributions and a one-year elimination of the personal exemption for high-income taxpayers."
(Bunning, then a member of the House, voted for the deficit-neutral version after voting against the unpaid-for version.)
And to offset the cost of additional weeks of benefits added in November 2009, Congress increased the federal unemployment payroll tax (known as the FUTA surtax, per the Federal Unemployment Tax Act), which raised $2.5 billion. "Now, it's important to note that the bill I signed will not add to our deficit," said President Obama at the time, in remarks that a Senate Republican aide circulated to reporters on Monday. "It is fully paid for, and so it is fiscally responsible."
However, subsequent reauthorizations in December, March, and April were designated "emergency spending" and not subject to pay-as-you-go rules.
Unemployment insurance, like its name suggests, is insurance: benefits are financed through federal and state payroll taxes (FUTA and SUTA). During recessions, Congress gives the unemployed additional weeks of benefits and the federal government pays half the cost, and states can borrow from the federal Unemployment Trust Fund if they run out of money. When the economy improves, states are supposed to replenish their own trust funds and pay back the federal government via unemployment payroll taxes.
"Really what is going on here is that there are two ways to understand 'paid for.' Unemployment Insurance in the real world is 'paid for' by federal and state payroll taxes over a business cycle," wrote Rick McHugh, a staff attorney with the National Employment Law Project. "In the federal budget world, this does not count as 'paid for,' even if in the real world those benefits are going to actually get paid for by UI payroll taxes."
According to the House Historian, Congress has used FUTA surtaxes to offset the cost of benefits during recessions in the 1990s, '80s, and '60s, but no offsets whatsoever during the recessions of the '50s, '70s, or in 2003.
"UI extensions have never been paid for with offsetting domestic spending cuts, even if there have been times when it was 'paid for' in the budgetary sense by some sort of FUTA surtax extension or other tax code changes," wrote McHugh.
Republicans today seem unlikely to favor raising taxes to pay for unemployment benefits, as demonstrated by the party's refusal to offset the deficit impact of reauthorizing the soon-to-expire tax cuts for the wealthy, which the administration estimates would cost $678 billion over ten years. This, plus the fact that deficit hawks outside of Congress don't consider stiffing the jobless a smart way to reduce the deficit, and Republican side arguments that extended benefits make people lazy, have made it easy for Democrats to point to an ulterior motive.
"They look at a crisis for families' budgets and see an opportunity for their political fortunes," said Reid. "They think that when unemployment goes up, so do their poll numbers."
Congress has never allowed extended unemployment benefits to lapse at a time when the national unemployment rate is above 7.2 percent.
The Senate will vote again on jobless aid Tuesday and Democrats, who will be joined by Carte Goodwin, the man appointed to fill in for the late Sen. Robert Byrd (D-W.Va.), expect to have the 60 votes they need to break the Republicans' filibuster. The bill will apply retroactively, so the unemployed will be paid the amount they missed during the lapse. The bill will do nothing for people who exhausted all 99 weeks available in some states before the lapse took effect.
[Mark Zandi testimony via Economy.com, 
[CBO, 
