Extending unemployment benefits was a no-brainer for Congress last year. Now, however, lawmakers are balking at a bill to provide additional relief to more than 1 million Americans who’ve been unable to find work for up to half a year. The change in attitude has little to do with the economy — the unemployment rate remains near 10% and economic growth remains anemic. Instead, lawmakers are responding to a change in the political winds caused by the mounting federal debt. We’re nervous about the debt too, but lawmakers seem to be attacking the wrong problem.
The justification for extending unemployment benefits now is the same as it was the seven previous times lawmakers have voted to provide emergency coverage since the recession began. Far too many people are chasing too few job openings. The ratio is about five jobseekers for every opening, about twice as high as in the previous recession, according to the National Employment Law Project in Oakland. It might not make sense to extend unemployment benefits in good times because of the risk of discouraging people from taking work that’s available. But when there are no jobs to be found, providing extra benefits can help sustain consumer spending until employers are hiring.
Granted, extending the benefits isn’t cheap — about $40 billion over two years, according to the Congressional Budget Office. The bill (HR 4213) also includes $47 billion for Medicare and Medicaid and an assortment of tax cuts and hikes, some of them of dubious merit, for a total 10-year cost of nearly $80 billion. That money would be added to the $1.5-trillion federal deficit.
Concern about the deficit had already led sponsors not to include proposals to subsidize health insurance for the newly unemployed and to prevent teacher layoffs in cash-strapped states, as Congress did in the $787-billlion economic stimulus package in 2009. Yet the clampdown on such stimulative spending seems premature in light of the economy’s fragile rebound. Federal Reserve Chairman Ben S. Bernanke warned lawmakers Wednesday that he couldn’t rule out a “double dip” recession, and that it would take years to regain the more than 8 million jobs that were lost in the downturn.
Congress can’t hope to bring the deficit under control without a more vigorous recovery than we’ve seen to date. That’s why it makes sense for lawmakers to keep a foot on the fiscal gas pedal, rather than exacerbating the effects of the weak economy that a recent JP Morgan Chase analysis blamed for much of the current deficit problem. The real long-term deficit and debt problems stem from the growing obligations of Medicare, Social Security and other entitlement programs. There are things Congress should be doing to reassure the public, such as starting to restructure entitlements. But lawmakers shouldn’t make the job harder than it already is by confusing today’s short-term challenges with the larger, long-term ones.