Muwabi Economic Forum

Controversy Over Unemployment Benefits

Some real controversy brewing courtesy of my favorite Senator…

One Senator Holds Up Bill, in New Level of Gridlock

The Senate tied itself in knots Monday as it tried to get around a single lawmaker’s objection to a spending bill, a showdown that has become emblematic of capital’s partisan gridlock.

Sen. Jim Bunning (R., Ky.) again blocked a $10 billion bill that would have extended unemployment benefits and other programs after halting its progress last week. And on Monday, the impact of his blockade started biting, with the expiration of benefits to 100,000 people and the suspension of 41 transportation projects across the country.

Mr. Bunning is holding things up by objecting to a “unanimous consent” request to advance the bill quickly, a routine maneuver for moving legislation forward that requires all senators to go along.

As the $10 billion measure foundered, Senate leaders began debating another, more than $145 billion bill that would achieve some of the same ends, including prolonging unemployment insurance until year’s end. A vote on that bill is expected by Friday, and lawmakers hope to make it retroactive so that jobless workers would still get their benefits, albeit delayed.

Even so, those who lost benefits might have to reapply, resulting in delays from three weeks to two months, according to Andrew Stettner, deputy director of the National Employment Law Project, a left-leaning advocacy and research group.

Democrats used Mr. Bunning’s move to highlight what they said was a pattern of Republicans gumming up the works on even the most popular measures.

Bunning and the Republicans supporting him here are making a really dumb mistake. First of all, this constant filibuster nonsense is starting to get old fast. All the people that are supposedly jumping on the bandwagon are bound to start jumping off if they decide to completely shut down government. As much as the tea party movement is powerful, people still blame the government for inaction in a bad economy. Even though the public realizes the liberal approach is misguided doesn’t mean they’re willing to do absolutely nothing without a strong narrative why. Blocking jobless benefits of all things is just about the most unpopular thing they can do. This paragraph was an effort to appeal to the one thing Republican’s care about: getting elected.

Now on to the more important things… like whether this is good policy. On this front, I actually agree with Bunning (although I think the appropriate way to express this is simply to speak against it and vote nay). The reasoning is very different, however. Unemployment benefits are an absolute disaster. As we can see, those on emergency benefits are now almost numbering 6 million. This is insane… are we simply going to pay these people to sit at home and do nothing all this time? I’m extremely sympathetic to people who have lost their job and cannot find something new. However, a year without a new job begins to beg other questions. Are these people unable to find jobs because they realistically cannot find something or is it because they have an unrealistic expectation of what jobs should be available and at what compensation. Probably a combination of both, but I would venture a guess that more people fall into the latter camp. I hear plenty of stories about how people feel entitled to a certain job, salary, or benefits. Some hold the misguided belief that they economy is actually in recovery. Others are perfectly content with the government’s check to sit at home with no conditions.

Now let’s assume the government eliminated emergency benefits. I think there would be a much bigger urgency to get a job… any job. Six months buffers the blow of an unexpected job loss and is ample time to find work. Unemployment benefits are typically about $300 a week. At 40 hours a week, you’d simply need about a minimum wage job to make up for the loss. I guarantee there is no difficulty in finding jobs for more than minimum wage. This doesn’t have to be the final career destination, but serves as honest work to get past the tough times.

Like housing or banking losses, the government is simply delaying a bottom with these stalling efforts. I know their intent is noble by trying to help those struggling most. What they don’t seem to understand is the economics of this situation require a lot of distasteful choices. All the people adversely affected in the short-term will be much better off down the road. In 2012, 20% underemployment with slowly declining wages is much worse than 10% underemployment and normal market forced wage declines. This is the choice as I see it. Rather than pretend things are okay and be worried about 2010 and 2012 elections, maybe we should start getting realistic and making these difficult choices now. Bunning is on the right track and is noble to put his foot down on more government “solutions” but he’s going about it the wrong way and not citing the correct reasons behind his decisions.


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One Response to “Controversy Over Unemployment Benefits”

  • Jae says:

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