The Costs of Paying for Unemployment Insurance

WASHINGTON, DC - DECEMBER 17: U.S. Sen. Rand Paul (R-KY) (3rd R) talks to reporters after a vote December 17, 2013 on Capitol Hill in Washington, DC. The Senate has passed a cloture vote to clear the way for a final vote of the Ryan-Murray Bipartisan Budget Act of 2013.   
National Journal
Fawn Johnson
Jan. 6, 2014, 4:28 p.m.

Re­pub­lic­ans are throw­ing a wrench in­to the de­bate over un­em­ploy­ment be­ne­fits by in­sist­ing that spend­ing cuts off­set any ex­ten­sion of fed­er­al aid for the long-term job­less.

It’s a con­ver­sa­tion shift that makes Demo­crats nervous. Once you start bat­tling over how to pay for something, le­gis­lat­ive talks be­come a new ball game. Passing the bill is no longer a brute battle of polit­ic­al wills. It’s a trad­ing match.

A bill to provide a three-month ex­ten­sion of un­em­ploy­ment be­ne­fits for people who have been out of work for more than six months has been sched­uled for a vote Tues­day, after harsh weath­er pre­ven­ted more than a dozen sen­at­ors from mak­ing it to the Cap­it­ol on Monday even­ing. The meas­ure needs 60 votes to move for­ward, and it’s a high hurdle. The pro­vi­sion car­ries a cost of $6.4 bil­lion over 10 years, and con­ser­vat­ives aren’t will­ing to go there.

That didn’t stop Demo­crats from scold­ing them. “What are you go­ing to tell the 1,600 people in Hager­stown, Mary­land, and those across the coun­try, who are des­per­ately look­ing for work? What are you go­ing to tell them?” de­man­ded Sen. Jack Reed, the Rhode Is­land Demo­crat who sponsored the un­em­ploy­ment bill with Re­pub­lic­an Sen. Dean Heller of Nevada.

Re­pub­lic­ans are, however, will­ing to dis­cuss ex­tend­ing un­em­ploy­ment be­ne­fits if they don’t bur­den fed­er­al cof­fers. Even Sen. Rand Paul of Ken­tucky said Sunday that he is open to ex­tend­ing un­em­ploy­ment in­sur­ance as long as it is paid for. House Speak­er John Boehner told the White House a month ago that he would go along with an un­em­ploy­ment ex­ten­sion if it was off­set. Boehner also wants an un­em­ploy­ment bill to in­clude oth­er pro­vi­sions to cre­ate jobs (and, he notes, the House has passed a bundle of them).

The Re­pub­lic­ans’ de­mands are com­plic­at­ing the un­em­ploy­ment is­sue for Demo­crats, who ar­gue that ex­ten­ded un­em­ploy­ment be­ne­fits have been in ex­ist­ence since the late 1950s and have gen­er­ally not been off­set since 1972. The ex­cep­tions to that rule were in 2009, 2011, and 2012, when the ex­ten­sions were part of lar­ger le­gis­lat­ive pack­ages that in­cluded tax off­sets. For ex­ample, the 2009 un­em­ploy­ment ex­ten­sion was part of the Work­er, Homeown­er­ship, and Busi­ness As­sist­ance Act.

For Demo­crats, set­ting a pre­ced­ent that fed­er­al long-term un­em­ploy­ment be­ne­fits must be paid for opens up a can of trouble. It means that the be­ne­fits are no longer driv­en by eco­nom­ic and em­ploy­ment con­di­tions but by the con­di­tion of the fed­er­al budget. Gen­er­ally, tight-em­ploy­ment eco­nom­ies trans­late to tight budgets, which means it be­comes in­fin­itely harder for law­makers to ap­prove ad­di­tion­al be­ne­fits.

“Quite frankly, I thought it was a mis­take when we off­set it be­fore. It should not be off­set,” said Sen. Ben Cardin, D-Md., who over­saw the un­em­ploy­ment-com­pens­a­tion pro­gram when he was in the House.

Cardin also ar­gues, cor­rectly, that ex­ten­ded un­em­ploy­ment be­ne­fits give a short-term boost to the eco­nomy of about 0.2 per­cent of GDP — not enough to off­set the cost, but it is something.

Demo­crats have not com­pletely closed the door on off­sets, which con­fuses the mat­ter. Rep. Sander Lev­in, D-Mich., the rank­ing mem­ber on the House Ways and Means Com­mit­tee, and Rep. Chris Van Hol­len, D-Md., rank­ing mem­ber on the Budget Com­mit­tee, offered late last year to off­set a short-term un­em­ploy­ment ex­ten­sion us­ing rev­en­ues raised from the farm bill, but there is no sign that their pro­pos­al will come up again this year.

House Demo­crats now are pre­par­ing to pres­sure — or per­haps shame — Re­pub­lic­ans in­to think­ing they have to sup­port an ex­ten­sion without an ac­com­pa­ny­ing spend­ing cut, aides say. Ways and Means Demo­crats are work­ing on an un­em­ploy­ment “counter” that will show a run­ning tally of the num­ber of job­less people who have ex­hausted their be­ne­fits. (It’s run­ning at about 7 per second.)

And the pres­sure tac­tics are work­ing. Sev­er­al Re­pub­lic­ans in both the House and the Sen­ate have called for some type of ne­go­ti­ation to al­low an un­em­ploy­ment ex­ten­sion to con­tin­ue. They just don’t want to give away the ex­ten­sion for free, which is ex­actly what Demo­crats are re­quest­ing.

Budget hawks, however, can be just as stub­born as lib­er­als. They note that even if ex­ten­ded un­em­ploy­ment be­ne­fits passed muster as emer­gency spend­ing in 2008, when the eco­nomy was col­lapsing, it’s been more than five years since then. It’s hard to ar­gue that it’s an emer­gency now.

“If the state [un­em­ploy­ment] fund goes in­to de­fi­cit, they can bor­row in the short term, but they’ve got to pay it back. Ul­ti­mately there has to be a bal­ance. They have to make tough de­cisions,” said Chris Ed­wards, the CATO In­sti­tute’s dir­ect­or of tax-policy stud­ies. “I think it’s a good idea. It en­sures re­spons­ib­il­ity.”

Mi­chael Cata­lini con­trib­uted

What We're Following See More »
PROCEDURES NOT FOLLOWED
Trump Not on Ballot in Minnesota
2 days ago
THE LATEST
MOB RULE?
Trump on Immigration: ‘I Don’t Know, You Tell Me’
3 days ago
THE LATEST

Perhaps Donald Trump can take a plebiscite to solve this whole messy immigration thing. At a Fox News town hall with Sean Hannity last night, Trump essentially admitted he's "stumped," turning to the audience and asking: “Can we go through a process or do you think they have to get out? Tell me, I mean, I don’t know, you tell me.”

Source:
BIG CHANGE FROM WHEN HE SELF-FINANCED
Trump Enriching His Businesses with Donor Money
4 days ago
WHY WE CARE

Donald Trump "nearly quintupled the monthly rent his presidential campaign pays for its headquarters at Trump Tower to $169,758 in July, when he was raising funds from donors, compared with March, when he was self-funding his campaign." A campaign spokesman "said the increased office space was needed to accommodate an anticipated increase in employees," but the campaign's paid staff has actually dipped by about 25 since March. The campaign has also paid his golf courses and restaurants about $260,000 since mid-May.

Source:
QUESTIONS OVER IMMIGRATION POLICY
Trump Cancels Rallies
5 days ago
THE LATEST

Donald Trump probably isn't taking seriously John Oliver's suggestion that he quit the race. But he has canceled or rescheduled rallies amid questions over his stance on immigration. Trump rescheduled a speech on the topic that he was set to give later this week. Plus, he's also nixed planned rallies in Oregon and Las Vegas this month.

Source:
‘STRATEGY AND MESSAGING’
Sean Hannity Is Also Advising Trump
5 days ago
THE LATEST

Donald Trump's Fox News brain trust keeps growing. After it was revealed that former Fox chief Roger Ailes is informally advising Trump on debate preparation, host Sean Hannity admitted over the weekend that he's also advising Trump on "strategy and messaging." He told the New York Times: “I’m not hiding the fact that I want Donald Trump to be the next president of the United States. I never claimed to be a journalist.”

Source:
×