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Saturday, October 22, 2016

Conservatives And Progressives Agree: Congress Should Not Cut Unemployment Benefits

Conservatives And Progressives Agree: Congress Should Not Cut Unemployment Benefits

Extremists who think government support for the unemployed is holding the economy back don’t have the facts on their side.

It’s a rare day indeed when Next New Deal bloggers support economic arguments with links to the Weekly Standard, the American Enterprise Institute, and Goldman Sachs. But at this moment, in this economy, we are all singing the same tune about the absolute necessity of extending unemployment insurance and providing additional support to the long-term unemployed. So, consider our current alignment a sign of extraordinary times.

Extraordinary because six years after the recession, there are still at least 4.1 million long-term unemployed Americans who have been looking for a job for more than six months and have yet to find work. Extraordinary because despite agreement from both progressive and conservative economists on the need for government action, the congressional flank led by Paul Ryan and Rand Paul is so far outside the mainstream that they are arguing to cut benefits for the long-term unemployed. Extraordinary because the 113th Congress is so dysfunctional that these extremists just might succeed in their goal.

Protecting unemployment insurance is a “disservice” to the unemployed, Rand Paul told the morning shows Sunday. The clear logic being that those folks looking for work for the last six months have been all-too-coddled by their $300-a-week government check, when what they need is some real motivation to pound the pavement even harder.

Unfortunately for Mr. Paul and his friends, there are a few flaws in this latest version of the-up-by-your-bootstraps logic. But, don’t take our word for it. For a full outline of the arguments in support of extending unemployment insurance, we turn to the conservative intelligentsia and financial establishment.

Who are the long-term unemployed? Lazy hangers-on?

According to a report from the Urban Institute, in 2012, two-thirds of the long-term unemployed were ages 26-55, one-third had children, one-half had at least some college, and 1 in 10 were college graduates.

Michael Strain in the Weekly Standard:

A large share of the long-term unemployed are people with relatively high earnings potential and personal responsibilities that extend beyond themselves. It is hard to imagine an educated worker in her prime working years with a kid at home having allowed a $300-a-week check to stand between her and a strenuous job search for over half a year.

Well, then why aren’t they getting jobs?

A growing body of empirical evidence indicates that the long-term unemployed experience “scarring” simply for being unemployed.

Congressional Testimony of American Enterprise Institute fellow Kevin Hassett:

There is an evident shift in the curve [the Beveridge curve which serves as a measure of how quickly the labor market matches workers with job openings] for workers who have been unemployed for 27 weeks or more, unemployed workers of shorter durations have experienced no outward shift in the Beveridge curve. They conclude that being unemployed for a longer amount of time has an effect on the chances that a worker will become employed, suggesting that being long-term unemployed is in itself a cause of the persistence in unemployment.

While I feel bad for them, it’s not my problem. Isn’t unemployment insurance just a big waste of my taxpayer dollars?

With a GDP multiplier of 1.6, unemployment insurance is one of the most efficient fiscal stimulus tools. Every dollar spent on unemployment insurance contributes $1.80 to GDP. In contrast, a lump-sum tax rebate or a dividend and capital gain tax cut would provide GDP multipliers of only 1.2 or 0.4, respectively.

Congressional testimony of Mark Zandi of Moody’s Analytics:

Emergency UI provides an especially large economic boost, as financially stressed unemployed workers spend any benefits they receive quickly. With few other resources, UI benefits are spent and not saved.

Moreover, a recent report from the Fed indicates that the declining skills of the long-term unemployed have degraded our potential for GDP growth in the future.

Goldman Sachs Global Economics, Commodities and Strategy Research analysis of Fed report:

They estimate that real potential GDP growth has only averaged 1.3 percent since 2007, the output gap is currently about 3 percent of GDP, and the structural unemployment rate had risen to 5.75 percent by 2012 (although it is now again on a slight downward trend). They then use a modified version of FRB/US with an added role for ‘hysteresis; in labor markets–that is, a gradual transformation of cyclical unemployment into structural unemployment and/or labor force withdrawal –to analyze the sources of this deterioration, using a simulation in which the model economy is hit by a major financial crisis that is calibrated to match the size of the 2007-2009 episode. In a nutshell, they find that the post-crisis period ‘features a noticeable deterioration in the economy’s productive capacity’ and that about 80 percent of the deterioration ‘…represents an endogenous response to the persistently weak state of aggregate demand.’

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  • Duckbudder

    But they might buy something with that money that I don’t approve of.

    • disqus_ivSI3ByGmh

      Oh, you mean like food, or medicine, or rent, or utility bills? Yeah, damn them. Of course, if the “Job Creators” would actually create jobs in the United States, instead of China, Bangladesh, India, Indonesia, or Pakistan, then maybe we still wouldn’t have this chronic unemployment problem.

      • Duckbudder

        You know that was Snark, right?

  • sigrid28

    Democrats and Independents in Congress have every reason to assume that a majority of Americans will stand behind them if they continue to support the efforts of the long-term unemployed to find work by extending the safety net and by replenishing other programs to allow these families to survive. I’m mystified that they do not propose legislation extending unemployment benefits, food assistance, Head Start, Meals on Wheels, a living wage–EVERYTHING their constituents need to boost the economy and begin to address income inequality. If Republicans can vote 46 times to defund or repeal the ACA, why can’t Democrats and Independents float legislation to address these dire needs 46 times if only to show they care? Are they afraid to fight for our survival–or just too distracted by Republican kabuki theatre to pay attention to constituents hanging on by a thread?

  • JD Mulvey

    You make a compelling case Neil –a no-brainer, in fact.

    That’s why our great Congress is going to do the opposite.

  • Defend Liberty

    For example, genetic traits are inherited from the two biological parents while cultural practices, customs, and traditions are picked up from family, friends, and media.

  • tax payer

    I know people that are out of work and they stay home all day, and say why not take advantage of being paid to stay home. I get paid for staying home too, but it’s called Retirement. They have the nerve to tell me they apply for positions they don’t qualify, so they never get a call for an interview. I wonder why. I don’t know, if they have to turn in proof to prove they are indeed out their searching for work. If so than it would be possible to know they are scamming the system. These workers must be looking the other way since no job would be there for them, if no one was unemployed.

    • disqus_fsqeoY3FsG

      How many people are you talking about? Perhaps you need to re-evaluate and perhaps make changes to the people you know and possible have some form of social interaction with.

      • tax payer

        Not that many, but one is too many for me.

        • Make it go away

          not to many huh? but its OK that corporations are taking millions of dollars out of the economy with tax loopholes,outsourcing and not paying liveable wages. Being that you’re retired do you actually have any clue to how many jobs are not out there and that without a jobs bill there will continue to be a problem with unemployment.

          • tax payer

            Companies are hiring, but they hire people that qualify for their positions. Don’t ask me to tell you where those jobs are because I am happy just being home and not have to work again.

        • Allan Richardson

          So one is too many for you to allow TRULY needy people to get the help? Then maybe that “one” is just a excuse to be heartless and, in the long run, self-defeating. For one thing, every additional hurdle you set up for people to “prove” they really need help and really are trying is a hurdle that some will be UNABLE to jump because they don’t have the money UP FRONT to get the proof (for example, drug tests, which cost MONEY, in case that never occurred to you); and a hurdle that also costs TAXPAYER money to administer (especially if, for example, you reward clean drug tests by reimbursing the cost; and if you don’t, how heartless is that?), and at some point, the additional cost is MORE than the remaining fraud that can be prevented by spending it.

          No system created by human beings can ensure that all (or most) of those who are honestly in need, while ensuring that NOT ONE person will be able to game the system. In fact, the farm subsidy program intended to keep family farmers from going broke has, for many years, been gamed by wealthy landowners who claim that they “would have planted” crops if the government hadn’t paid them; and that includes members of CONGRESS who want to deny help to the poor, such as the CHAIRMAN of the House Agricultural Committee in charge of controlling that very subsidy that he receives.

          Go back and watch your favorite Dickens-based movie “A Christmas Carol” again, but THIS time, watch it FORWARD.

          • tax payer

            I was drug tested 21 time in 21 years and I would tell them you are wasting your time and money testing me since I don’t do drugs. It was like a vacation for me because I would tell them I just went to the bathroom and it takes me at least four hours to go again. I got paid for those hours. I’ll do that and you get ready to go to work unless you too are retired like me.

          • tax payer

            Of all people I thought you would understand what I put down, I don’t care to see someone like my friends that stay home and not look for work. One too many is I don’t approve of what my friends are doing, but they do it because no one bothers to show up at their house to check, if they are really out there looking for work.

      • jointerjohn

        Always remember that for persons like “tax payer” a single, three-times removed, hearsay, bad example which reinforces their need to feel superior and look down on others will be repeated and exaggerated for years to come. Its a lot like their favorite “people buying steak with a SNAP card” routine they have been boring us with for decades. All we humans like to have experiences that reinforce our notions but conservatives thrive on it.

        • tax payer

          ” Not too many ” sure did bring out some comments and to tell you the truth I don’t even care as long as I get what is due to me for working 45 years of my life. I worked for minimum wages and did I stop, and say I quit because I can’t make it. No, I looked for something better and left the other job, so someone else could get it.

  • S.J. Jolly

    Maybe Congress doesn’t care about the unemployed because few on Unemployment make large campaign contributions?
    Maybe those on Unemployment should get together, organize, and run some of their members for political office, with the others campaigning for them. That is sure to scare those now in office like nothing else!

  • Bryan Blake

    What is clearly illustrated is the ancient and inherent attitude of the capitalist class toward labor. They disdain labor so much that they DO NOT consider their own work to be labor. Their attitude is betrayed by the financing by untold millions over several generations to carve their incomes into special categories of those of mere workers/laborers. Of course they take comparatively little of their income as salary. What they do take as income enjoys the exception of paying Social Security and Medicare contributions on all but the first $110,000.00. I have never been able to understand with the median income in this nation well below $100,000 why the ordinary worker/labor has to pay contributions on 100% of hers or his income? I am sure when/if the median income reaches 110,000 the rich and ultra-rich will have the exemptions at least doubled or even quadrupled!

    When I was growing up in Texas my father worked his way up to become the president of a local of the Steelworkers union in a northern metals plant that had located to our area. The company had been promised an endless supply of nonunion workers in an extreme right to work for less state. In the early days and strikes by the union the local sheriff, at the behest of the company, called in The Texas Rangers. Police clubs were used. Bodies and heads were pounded and of course many of the strikers were jailed. They did not suffer the punishment labor endured in other parts of and in different times of our country. But it was a clear statement of the anti-union bias in Texas that still flourishes today. That time has receded but labor in Texas has not made any real progress. We are still a virulent anti-labor and staunch right to work for less state.

    I spent most of my adult working life as a small business owner so I support regulated capitalism that offers a fair and level playing field with the opportunity for all to work and enjoy the maximum fruits of their labor.

    I would like to take heart that conservatives are supporting unemployment insurance for the unemployed – as they should. But conservative leaders are not buying into it. Listen to Paul Ryan, Rand Paul, Marco Rubio added to John Boehner’s refusal to add extension of unemployment insurance to the budget deal and their attitude is clear and once again without redemption. The unemployed, working poor and poor suffer now because of the failed financial manipulations that continue to plague us. But conservatives are the public and institutional bulk work for the modern greed-fueled “free market capitalism” that steals the value of our labor and transfers the wealth to the top 1%.

    Just as it is easy to call for raising the age of eligibility for receipt of Social Security when you work in a suit or business casual in an air conditioned and heated office, it is just as easy to offer meaningless policy proposals. These proposals are merely “lovely sounding proposals” to offer justification for their institutional positions. They have no chance at fruition! Why?

    1. The Democrats no longer get down in the trenches and fight for American labor. The Democrats are now under the control of the DLC – translate Republican Lite!

    2. The Republicans will not pass any program seen to violate the principles of their “free-market capitalist” puppet masters!

    Hopefully in the 2014 election the 1 & 1/2 political parties will be knocked on their collective butts with more women and men elected truly on the side of We The People.

  • iamproteus

    “Extending unemployment insurance is not a partisan issue. The government providing a helping hand to those who most need it has not, historically, been a partisan issue.”

    Obviously, the republicans never got the word.