The GOP Is Still Holding the Economy's Victims Hostage

By John Cassidy, The New Yorker

08 January 14

f you think Tuesday's vote in the Senate to extend unemployment benefits means that Washington has finally come to its senses, think again. Although six Republican senators broke with their party and joined Democrats in supporting the notion of preserving benefits for about 1.3 million Americans who have been out of work for more than six months, this was just a procedural vote that paves the way for a full debate on the measure. And Republicans, in both the Senate and the House, have made clear that they won't approve any actual legislation unless the White House agrees to cut spending in other areas, to cover the cost of the extension - about 6.4 billion dollars, according to the National Journal.

From a political perspective, it's easy to see the appeal of this maneuver. Going into an election year, the last thing the Republicans want is to be depicted as heartless goons with no sympathy for the millions of Americans struggling to find work, the blameless victims of the Great Recession and its aftermath. (Of course, this is exactly how the Democrats would like to portray them.) At the same time, though, the average G.O.P. congressman or senator lives in mortal fear of upsetting right-wing groups, such as Heritage Action for America and the Club for Growth, which are leading the fight against extending jobless benefits. (On Monday, Heritage Action said it would include the Senate vote on its "legislative scorecard," which ranks elected officials on their fealty to the conservative cause.)

This political dilemma explains why the list of Republicans who voted with the Democrats includes just one senator up for reëlection this year: Susan Collins, of Maine, who is widely regarded as a shoo-in. In the upside-down world of today's G.O.P., the only members who can put the party's best interests front and center are mavericks, such as Collins, and those who don't face the prospect of being challenged from the right in a primary election. None of the other five defectors - Dean Heller, of Nevada; Kelly Ayotte, of New Hampshire; Dan Coats, of Indiana; Rob Portman, of Ohio; and Lisa Murkowski, of Alaska - is up for reëlection until 2016. And even most of them have said that they won't support the final bill unless the White House agrees to cut other government programs.

So far, the Obama Administration has rejected this quid pro quo, and it should hold firm. The Emergency Unemployment Compensation system, which provides benefits averaging about two hundred and fifty dollars a week to the jobless after their twenty-six weeks of state-provided benefits run out, isn't an ongoing spending program. As its name suggests, it is a contingency measure that goes into effect only when the unemployment rate is abnormally high and the unemployed are finding it unusually difficult to find work. Until very recently, the program enjoyed all-party support. Indeed, it was George W. Bush, in July, 2008, who signed the current version into law.

Back then, it is worth noting, the unemployment rate was 5.6 per cent and the long-term unemployment rate - i.e., the proportion of people in the workforce who had been out of work for more than six months - was one per cent. The average duration of unemployment was 17.1 weeks. Today, all of these figures are considerably higher. The unemployment rate is seven per cent, the long-term rate is about 2.5 per cent, and the average duration of unemployment is more than thirty-five weeks.

After a recession ends, it is always a judgement call when to wind down the emergency benefits program and limit eligibility to twenty-six weeks. But, as the White House Council of Economic Advisors noted in a recent study, the suggestion that extended benefits should be withdrawn now goes against more than half a century of history. "In no prior case has Congress allowed special extended benefits to expire when the unemployment rate was as high as it is today," the study noted. "Moreover, the long-term unemployment rate is twice as high today as in any prior month when extended benefits were allowed to expire." This record applies to Republican and Democratic Administrations alike. After the recession of the early nineteen-seventies, the Nixon Administration waited until the long-term jobless rate had reached 0.9 per cent before cutting off extended benefits; in the nineteen-eighties, the Reagan Administration waited until the rate had reached 1.2 per cent.

Today's G.O.P. is different, of course. Its insistence that an extension be held hostage to finding equivalent cost savings in other areas defies precedent and economic logic. Firstly, the financial cost of the program is pretty modest: about two billion dollars a month in 2013. Secondly, almost all of this money goes straight back into the economy, where it generates additional spending, hiring, and tax revenues. And finally, as I said earlier, this is a temporary program, not a permanent one. Assuming the economy continues to grow and the unemployment rate continues to trend down, it will eventually be put on hiatus until the next recession.

Other than an ideological aversion to government spending of any kind, there is no reason not to extend unemployment benefits for a while longer. Economists sometimes worry that making them available for long periods will encourage the jobless to remain unemployed rather than taking jobs, but careful studies have failed to show much evidence of this. When employment openings are scarce, as they are still, a bigger worry is that curtailing benefits will encourage some of the long-term unemployed to drop out of the labor force completely. (As a condition for receiving benefits, recipients have to be looking for work.) When that happens, it inflicts further suffering on many of the people concerned, and crimps the growth potential of the economy at large.

Perhaps it isn't accurate to say that most Republican senators and congressman don't care about these things. But they are trapped inside a party and a conservative movement that, increasingly, makes them act as though this were the case. The best hope for the long-term unemployed - and, indeed, for the G.O.P. - is that cynical self-interest and a fear of alienating moderate voters will ultimately persuade lawmakers to do the right thing, even if that means defying the ultras.

Will it happen? Let's hope so.