DN Editorial: Unemployment benefits should be extended

Posted: November 23, 2010

THINK THE COUNTRY can't afford to help millions of our fellow citizens who are unemployed through no fault of their own?

Think again: We can't afford not to.

Forget compassion - as a disturbing number of Americans apparently have done. Look beyond ideology - as a disturbing number of Americans can't seem to manage. Failing to extend emergency federal unemployment benefits will not only devastate the 15 million people who don't have jobs now, but it will kneecap the rest of us who are still working, at least for the time being.

If Congress fails to extend emergency unemployment benefits in the next few weeks, consumer spending will fall by $50 billion in 2011. Economic growth, already anemic, will fall by 0.4 percent by February - and even more beyond that. Without an extension of unemployment benefits, the economy could lose one million more jobs.

These figures come from a report last week from Congress' Joint Economic Committee, based on information provided by the nonpartisan Congressional Budget Office and economists of all political stripes.

But you don't need a degree in economics to see that if people don't have the money to buy things like food or clothes or heat or gas for their cars (and $80 billion would be drained from the economy if benefits expire), then businesses can't make profits, and can't hire new employees - heck, they won't be able to keep the employees they have.

And if millions of Americans don't have the money to make their mortgage payments, their homes will go into foreclosure, which will reduce the value of the homes of neighbors who still are making payments.

Here's the situation: In ordinary times, people who lose their jobs collect unemployment compensation from their states for 26 weeks. But when the economy is in recession and unemployment is high - like now - the federal government steps in to extend unemployment compensation temporarily until the economy rights itself. In the past 60 years, the highest unemployment rate at which federal benefits were cut off was 7.4 percent. Right now, the unemployment rate is 9.6 percent. There is only one job for every five unemployed Americans. It doesn't matter how diligent they are or how much they lower their standards, four out of five job seekers will fail to find jobs.

The emergency benefits will expire next Tuesday. Last week, Republicans blocked a bill that would have authorized an extension for another three months that was brought to the floor under a suspension of the rules, which requires a two-thirds vote. It failed, 258-154. The bill will probably be brought up again in the next couple of weeks.

Republicans explained their "no" votes as concern for the deficit: The extension of benefits for three months would add $12.5 billion to it. But these very same representatives are adamant about extending the Bush-era tax cuts to people making more than $250,000 a year, which would increase the deficit by $120 billion over two years.

Unemployment benefits provide an effective economic stimulus, much better than tax cuts for the rich since the unemployed are likely to spend all the money they get immediately. Every dollar spent on unemployment-benefit increases adds $1.60 to the economy.

Maybe some members of Congress simply can't imagine what it is like to be unemployed and face having no income at all. According to a recent report by the Center for Responsive Politics, Congress' collective income rose 16 percent last year, and nearly half its members are millionaires.

But you can be rich, and even heartless, and still understand simple math: Subtract a million jobs from the economy, and everyone gets hurt. *

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