FRONT PAGE CONTRIBUTOR
Senate Republican Support Of Unemployment Benefits Extension Combines Bad Policy and Bad Politics
Former Israeli Prime Minister Abba Eban once remarked of the Palestinians that they never miss an opportunity to miss an opportunity. The same might be said of Senate Republicans under the alleged leadership of Mitch McConnell.
Back when the Obama Depression first hit us, the Congress passed a law extending unemployment benefits from 26-weeks to 99-weeks. Those extended benefits expired on December 28.
The Obama administration and Senate Democrats have been pushing to reinstate the extended benefits. Now five Republican senators — Rob Portman (OH), Dean Heller (NV), Lisa Murkowski (AK), Susan Collins (ME) and Mark Kirk (IL) – have joined forces the Democrats to push this package through the Senate.
From the Washington Post, Senate reaches bipartisan deal on unemployment benefits extension:
The bill would effectively restart a key aid program for long-term unemployed workers whose jobless benefits went beyond state limits, which are about 26 weeks with some variation for each state.
The roughly $10 billion cost of the renewed federal jobless benefits would be offset by extending fees on goods coming through U.S. Customs and an alteration to the way corporations contribute to pensions, the senators announced.
In addition, the legislation will include two changes to the unemployment program, one of which will require more job training for long-term jobless workers in order to continue receiving insurance benefits. Also, the legislation includes a provision that eliminates state or federal unemployment benefits for laid-off workers whose gross income the previous year topped $1 million — which, according to federal estimates, represented 0.03 percent of all recipients.
Some Republicans involved in the discussions felt that the additional reforms to the unemployment program were insufficient, involving something akin to a promise of more changes to the unemployment program down the line.
The extended benefits are bad policy and bad politics.
Studies have shown that the extension of benefits is a drag on the economy. A recent study titled Case Study of Unemployment Insurance Reform in North Carolina makes a very compelling case that these benefits do more harm than good.
According the Washington Free Beacon, New Study: Unemployment Benefits Weaken Economy:
The study examines policies enacted by North Carolina that reduced the length and generosity of unemployment benefits from the state. The reforms have been presented as a test case on the likely effects of allowing federal benefits to expire.
The study found that the state’s reforms were an economic positive. After the reforms were implemented the unemployment rate and the number of unemployed workers both declined, even as it saw “a strong increase in the labor force.”
The increase in North Carolina employment was primarily in the private sector. Wages and earners remained mostly steady, while the average number of hours worked slightly increased.
The results stood in stark contrast to employment trends in neighboring South Carolina and Virginia.
“North Carolina stands out among its neighbors in the improvement in its labor market performance since its unemployment insurance system was reformed,” the study said.
“People respond to incentives,” said Ryan Young, a regulatory studies fellow at the Competitive Enterprise Institute.
“Unemployment benefits reduce one’s incentive to look for a job,” Young wrote in an email. “They allow some people to wallow in discouragement longer than they otherwise would. Other people decide that receiving benefits can let them wait until a higher-paying job opens up, instead of having to take the first job available, whatever it is.”
To make matters worse, the extended benefits are to be retroactive and paid for by increasing costs on consumers and fairy dust. The increased custom fees will quickly be felt by consumers who have seen real wages not only stagnate but actually decrease under the maladministration of Obama and his cronies. Altering accounting rules on businesses which already aren’t hiring for fear of their operating environment strikes a sane person as a profoundly stupid way of funding unemployment benefits unless you are trying to increase the number of unemployed.
It is also bad politics. One of the objectives of the administration has been to make the maximum number of Americans possible dependent upon the Federal government for their livelihood. We’ve seen the exponential growth of food stamps and the wild expansion of businesses, like wind energy, that cannot survive without substantial direct and indirect subsidies. They have eased people out of the workforce by loosening disability requirements. This is simply another part of that equation.
Why, in an election year that is shaping up to be a wave year, are members of the GOP going out of their way to help the administration stave off disaster? Who knows. Some of them are just stupid. Some are backbenchers who want attention. Some, like Mark Kirk, are afraid of going the way of Scott Brown. Some are viscerally hostile to conservatism and they would rather give this gift to Obama to mitigate Democrat losses in November rather than see conservatives interfere with their time at the trough. Whatever the reason, these five senators have done a grave disservice to their nation, to their party, and to the men and women this decision will effect. They should be ashamed.