As the U.S. Senate tries to strike a deal on extending the deadline for emergency unemployment benefits, the Tribune writes a misguided editorial opposing efforts to extend additional aid.
Like U.S. Senate Republicans, the Tribune editorial board cares deeply about the nation's unemployment crisis. And they express that compassion by ... opposing efforts to extend more aid to the jobless!
To justify their position, the board used some curious math in an editorial today:
Here's the hard truth: All the extra weeks of benefits help choke off the nation's economic recovery by subsidizing unemployment. In other words, the assurance of continued benefits keeps some people from the normal process of seeking and accepting jobs. By some estimates, about 15 percent of the unemployed would be back at work, if not for the extensions they're receiving. Moreover, to some degree, additional jobs would be created if more workers were willing to take them on employers' terms.
It'd be nice if the Tribune would cite exactly which estimates they relied on, because the suggestion seems dubious, at best. Currently, there are roughly five applicants for every open job on the market. On average, those looking for work have been jobless for over eight full months. And unemployment benefits -- which total no more than $385 per week for individuals in Illinois -- are much lower than most full-time salaried positions. Indeed, recent data (PDF) shows that the median annual wage for a worker in the Land of Lincoln is $34,475. The maximum annual salary an unemployed worker could receive utilizing jobless insurance is just $20,020.
In other words, it's safe to assume that only a handful of people who are reliant on emergency insurance are satisfied with what they're receiving from the government.
The Tribune also ignores the stimulative benefits of jobless aid. Additional benefits will likely be spent quickly. For every dollar the government devotes to unemployment benefits, economist Mark Zandi estimates that the economy sees a return of $1.64. On a related note, Dean Baker of the Center for Economic and Policy Research projects that trimming $30 billion off the House jobs package will reduce GDP by approximately $50 billion. Cutting back the safety net further won't spur the recovery; it will inhibit it.
In Washington, the debate over a filing deadline extension has resumed in the Senate. Politico is reporting that the Democratic leadership will try to invoke cloture on their package next week, which would include $24 billion in federal assistance to state governments. While that's exciting news, especially considering Illinois' growing deficit, unemployed folks shouldn't expect an immediate change. Even if Senate leaders find enough votes to approve the stimulus measure, the bill's funding structure could look considerably different from the House version that passed by a thin margin in late May. That means it will ultimately have to head back to the lower chamber for a concurrence vote.
Politico has more on the differences between the bills:
At issue is a House-backed reform aimed at wealthy investment fund managers who now shelter much of their “carried interest” income as capital gains, subject to a much lower tax rate than that paid on ordinary income. [...]
The House bill would tax 75 percent of “carried interest” earnings as ordinary income and 25 percent as capital gains. The Baucus plan would set a 50-50 split for the first two years, changing to 65-35 beginning in 2013. And venture capital companies stand to benefit most from an added category that allows a 55-45 split in cases in which assets have been held for seven years or longer.
With each passing day Congress deliberates, millions of Americans are exhausting their current tier of unemployment benefits and finding themselves unable to apply for the next.
Finally, it's important for the Tribune editorial board and other critics of the ongoing aid to remember that most of those clamoring for an extension are simultaneously working very hard to find work. For example, take this recent comment from PI reader "msanonymous222" describing her daily routine:
I've been unemployed for 20 months. I work on a job search every day, starting between 4 and 5 am. I also work on this--long hours. Tomorrow I have a virtual job fair, two webinars and a telephone conference scheduled in between working on lobbying for HR 4213. My efforts on both are nonstop, because, to me, both are equally important. One is critical for my short-term survival. The other is critical for my long-term survival.