Do Republican Senators Hate Unemployed Americans? Seems Like It…

With the Senate finally passing an extension of unemployment benefits and COBRA health insurance subsidies, the efficacy of unemployment insurance is again being debated in the corridors of our elite institutions. The arguments against unemployment benefits generally fall into two categories. First is the argument that unemployment benefits encourage sloth amongst would-be job seekers. Wednesday’s Washington Post article on the unemployment extension benefits brings that argument to the forefront:

But complaints that extending unemployment payments discourages job-seeking have begun to bubble into the political debate. Sen. Jim Bunning (R-Ky.) recently single-handedly held up the latest extension, a bill to keep unemployment benefits in place for 30 more days, saying Congress should find other cuts to cover its $10 billion price tag.

Sen. Jon Kyl (R-Ariz.) did not join Bunning’s effort, but he defended his colleague’s point of view. Kyl told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the job market.

“If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,” Kyl said. “I am sure most of them would like work and probably have tried to seek it, but you can’t argue it is a job enhancer.”

I suppose under certain economic conditions unemployment benefits could be a de-motivator for the unemployed. Whatever those economic circumstances are though we’re not there now.

The reality is that the economy, as of February, was still losing tens of thousands of jobs every month when we need to be adding about 127,000 jobs just to hold the unemployment rate steady. According to the Bureau of Labor Statistics we are now down 14.9 million jobs and those who are unemployed are out of work for an average of almost 30 weeks – the highest level in the 50 years we’ve been measuring.

We’re not facing historic numbers of unemployed because we suddenly have historic numbers of lazy Americans. The jobs simply are not there. Kyl’s blathering about unemployment benefits not being “job creators” is utter nonsense. While unemployment benefits were not designed to be job creators per se the American economy today is fueled by consumer spending. The surest way to keep our economy out of the ditch is to put money in the hands of those most likely to spend it immediately. Their spending on goods and services may not be “creating” jobs but it’s damn sure saving jobs. Jon Kyl is a fool to argue otherwise. A recent nationwide survey of small businesses by the National Federation of Independent Businesses shows that the businesses who fuel so much of our economy are not hiring because there simply are not enough customers.

The second argument is a general disdain for growing our deficit. Senator Judd Gregg argued this point on Wednesday:

“Why do we keep doing this?” asked Sen. Judd Gregg (R-N.H.). “Why do we keep passing debt on to our children? Why do we keep running program after program out here that is shrouded in sweetness and light but not paid for?”

Judd Gregg is, of course, an utter hypocrite to be decrying budget deficits today given his record, but he’s also wrong on the merits. As University of Massachusetts economist Robert Pollin noted in The Nation recently:

But it will be necessary for the government to keep injecting spending into the economy, which will add to the deficit. Scare stories aside, the fiscal deficit is not dangerously large. The interest rates the government is paying on its borrowing–as opposed to the rates that businesses have to pay on much riskier loans–remain historically low, in the range of 2 to 3 percent. This is because the world’s financial magicians of just a few years ago have chosen to protect their remaining wealth by buying up the safest possible assets they can find, which are US Treasury bonds. When Ronald Reagan was running up record-breaking deficits in the early 1980s, the interest rates on the bonds were around 13 percent.

This huge gap in interest rates between now and the Reagan era will save the Treasury about $175 billion per year going forward. Also remember that falling unemployment rates reduce the deficit on their own, with each 1 percent drop generating about $90 billion in government revenues or reduced spending obligations. This is because when people are newly employed, they can support themselves and pay more taxes.

No one is arguing that this is an ideal way to prop up the economy, but, after three decades of calamitous conservative economic policies, we’re left to take more drastic measures than any of us would like. Putting money into the pockets of the unemployed saves jobs, stimulates the economy and, in the long run ,won’t, as Senator Gregg argues, hurt our grandchildren.

To put it in terms that these Republicans might understand, you work with the economy that you have, not the economy that you wish you had.

Photo by Mike Licht, NotionsCapital