Monday, July 5, 2010

Republican unite against the unemployed!

Before recessing for the July 4th weekend, the United States Senate failed to extend unemployment benefits for the nation's long term unemployed. As a result, 1.4 million unemployed workers have lost their only source of income.

Every single Republican Senator and a handful of Democrats voted against the extension!

This is the worse recession since the Great Depression. 15 million people are out of work. Almost half of the unemployed have been jobless for six months or more, the standard measure for long-term unemployment. Millions more are not even counted, having dropped out of the labor market entirely, 650,000 last month alone. Yet the Republican Party is united in opposing an extension of unemployment benefits because they fear that it will increase the deficit or even more insanely they believe that unemployment benefits undermine the unemployeds' incentive to work.

This position is cruel particularly in light of the Republicans united opposition to legislation requiring billionaire hedge fund and private equity firm operators to pay federal income taxes at the same rates as other Americans.

It is also bad economics since unemployment benefits are among the most effective forms of economic stimulus, something the slumping economy sorely needs.

Nobel Prize winning economist, Paul Krugman, refutes the Republicans harmful and uninformed position writing:

When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn’t booming — again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work — but they can’t take jobs that aren’t there.

Wait: there’s more. One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That’s why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly — while allowing that aid to lapse, which is what is happening right now, is a recipe for even weaker job growth, not in the distant future but over the next few months.

But won’t extending unemployment benefits worsen the budget deficit? Yes, slightly — but as I and others have been arguing at length, penny-pinching in the midst of a severely depressed economy is no way to deal with our long-run budget problems. And penny-pinching at the expense of the unemployed is cruel as well as misguided.

So, is there any chance that these arguments will get through? Not, I fear, to Republicans: “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, in this case, his hope of retaking Congress — “depends upon his not understanding it.” But there are also centrist Democrats who have bought into the arguments against helping the unemployed. It’s up to them to step back, realize that they have been misled — and do the right thing by passing extended benefits.

The entire column is linked.

1 comment:

Anonymous said...

Government employees and union employees are the only people benefiting from the Obama administration. Taxpayers and the private sector are suffering greatly and there is no hope in sight. Ironic that this thought smacked me on the 4th of July...