I was gonna start a thread using this editorial from the NY Times as the focus of debate. But since there is a thread about the "jobs bill" already, I might as well just add this to the mix.
The purpose of posting this is NOT to endorse the Times' position. The purpose is to inquire more deeply into just what - IN ANYTHING - the US Congress should do about unemployment in present day America. It seems to me that extending unemployment benefits is a good idea. There have been several articles in the press about the devastation that long term unemployment visits on the finances and assets of the unemployed and how there is a "hangover" effect even when they find work, because most of their assets are gone and there are often large debts to pay off that were run up during the period of unemployment.
But is that something the gummint should concern itself with?
I await your thoughts.
February 12, 2010
Editorial
How Not to Write a Jobs Bill
The jobs bill emerging in the Senate is pathetic, both as a response to joblessness and as an example of legislation deemed capable of winning bipartisan support.
An $85 billion proposal put forward Thursday morning by Max Baucus, the chairman of the Finance Committee, and by Charles Grassley, the committee’s top Republican, scarcely began to grapple with the $266 billion in provisions for jobs and stimulus that President Obama proposed in his budget. It was not even in the same league as the modest House-passed $154 billion jobs bill.
Worse, about half of the proposal had nothing to do with new jobs. The single largest chunk, about $31 billion, went to renew expiring tax breaks that are generally useful but unrelated to jobs. Another $10 billion would renew an expiring Medicare payment formula so doctors wouldn’t face a pay cut.
And, by Thursday afternoon, many Democrats said they could not support the lopsided proposal. So the majority leader, Harry Reid, decided to hold a vote on a stripped-down, $15 billion version in late February. The rest of the package, plus many other job-creation ideas, would be left for another day.
With 14.8 million Americans unemployed — more than 40 percent of them for more than six months — the smaller package is so puny as to be meaningless. Most of the $15 billion would cover the cost of a payroll tax holiday in 2010 for employers that hire unemployed workers. Since there are more than six unemployed workers for every job opening, a tax break for hiring is worth a try. But the proposed credit is too small to have a noticeable impact. At best, it would create about 250,000 additional jobs from April through the end of the year, according to an analysis by Moody’s Economy.com.
An even bigger problem is that the hiring credit is unlikely to work as intended unless it’s paired with other federal support to generate and maintain consumer demand — mainly extended unemployment benefits and more fiscal aid to states. No matter what Congress does to lower the cost of labor, employers won’t hire unless they believe demand will be sufficient to sell whatever the business produces. Absent unemployment benefits (which will expire at the end of February if Congress does not extend them) and aid to hard-pressed states, there are, as yet, no compelling signs that consumer demand will hold up this year.
At a minimum, a credible jobs package must extend unemployment benefits through 2010. Piecemeal extensions only ensure that lawmakers will have to return to the issue repeatedly, creating avoidable uncertainty for unemployed workers and for businesses that rely on the consumer demand generated by jobless benefits.
A credible package also must provide fiscal aid to states, which continue to be slammed by falling tax revenues just as more people need help. Without more aid, states will have to cut spending and raise taxes to close an estimated $142 billion budget gap for fiscal year 2011, which starts on July 1 for most states. Last year’s gap was $125 billion. Next year’s is anticipated to be $118 billion.
What senators don’t understand or choose to ignore is that state budget cuts mean layoffs. State and local governments are among the nation’s largest employers, responsible for 15 percent of the labor force, about the same share as the health care sector and far larger than manufacturing or the financial sector. Since August 2008, states and localities have eliminated 151,000 jobs.
State budget cuts also end or reduce payments to private contractors and to recipients of social programs. That reduces demand, which leads to more job loss.
The $15 billion Senate proposal may win Republican votes, but better-than-nothing is not nearly good enough. Neither is a pledge to do more later. A full response to joblessness is already overdue.
Correction:
A previous version of this editorial misstated next year's budget gap. It should have read $118 billion, not $118 million.
