Bipartisan Miracle? Senate Republicans Open to Unemployment Extension

Senate Finance Committee Ranking Member Orrin Hatch (R-UT) speaks during a hearing on health insurance exchanges on November 6, 2013 in the Dirksen Senate Office on Capitol Hill in Washington, DC. 
National Journal
Fawn Johnson
Dec. 17, 2013, 2:40 p.m.

Sen­ate Re­pub­lic­ans are will­ing to dis­cuss an ex­ten­sion of long-term un­em­ploy­ment be­ne­fits early next year, as long as it is paid for, sev­er­al of them told Na­tion­al Journ­al on Tues­day.

Their will­ing­ness to en­gage on the top­ic sig­nals that un­em­ploy­ment be­ne­fits could be­come a do­mest­ic policy rar­ity — a safety-net is­sue that isn’t auto­mat­ic­ally mired in a polit­ic­al shout­ing match. But any ser­i­ous ne­go­ti­ations would re­quire law­makers on both sides of the aisle to cal­cu­late the pluses and minuses of un­em­ploy­ment be­ne­fits for the eco­nomy and wheth­er it’s ap­pro­pri­ate to off­set the cost.

That con­ver­sa­tion has yet to hap­pen. Some Sen­ate Re­pub­lic­ans seem will­ing, even eager, to have it.

“I don’t want to leave people hurt­ing,” said Sen. Or­rin Hatch, R-Utah, who ad­ded that Sen­ate Re­pub­lic­ans didn’t even have a chance to con­sider un­em­ploy­ment as part of the budget deal that passed the House last week. That deal is ex­pec­ted to pass the Sen­ate as early as Wed­nes­day.

Sen. Bob Cork­er, R-Tenn., echoed Hatch’s frus­tra­tion. Un­em­ploy­ment be­ne­fits “wer­en’t a part of this le­gis­la­tion, so it’s kind of hard to say what we would do,” he said. “What is it coupled with? How is it paid for? Are there re­forms in how it’s be­ing ad­min­istered?”

Without con­gres­sion­al ac­tion, un­em­ploy­ment be­ne­fits for long-term un­em­ployed people will ex­pire on Dec. 28. Sen­ate Ma­jor­ity Lead­er Harry Re­id, D-Nev., has pledged to bring a ret­ro­act­ive un­em­ploy­ment ex­ten­sion to the Sen­ate floor as one of the first or­ders of busi­ness when mem­bers re­turn in early Janu­ary. He wants the be­ne­fits to con­tin­ue for an­oth­er year, at a cost of $25 bil­lion over 10 years.

Re­id’s pro­pos­al, which has no off­set, will not fly among Re­pub­lic­ans.

“I can’t jus­ti­fy adding $25 bil­lion more to the de­fi­cit,” said Sen­ate Minor­ity Whip John Cornyn, R-Texas.

But that doesn’t mean oth­er op­tions aren’t avail­able. What if the ex­ten­sion is fully paid for? “That would be a start,” Cornyn said. “The way I un­der­stand the eco­nom­ics of this is, you can raise wages on some work­ers, and you can put oth­er people out of work.”

Cornyn is hint­ing at a school of thought among some eco­nom­ists that says em­ploy­ers are less likely to cre­ate job open­ings when they know that eli­gible work­ers have ac­cess to un­em­ploy­ment. First, they have to pay those work­ers con­sid­er­ably more than their weekly un­em­ploy­ment rate. Second, if they have to lay them off, their tax rates go up.

Demo­crats will have to con­tend with these ar­gu­ments when they pro­pose ex­tend­ing be­ne­fits for the long-term un­em­ployed next year. They can say that the Con­gres­sion­al Budget Of­fice pro­jects a net boon for the eco­nomy, even with the neg­at­ive im­pact of some people re­main­ing un­em­ployed for longer.

But CBO num­bers are cold com­fort for most Demo­crats. They plan, ini­tially, to go with the more emo­tion­al ar­gu­ments about the hu­man side of the story, de­scrib­ing in de­tail the 1.3 mil­lion people who are out of work and will sud­denly have no safety net, to make Re­pub­lic­ans squirm.

“When the real­ity of what the fail­ure to ex­tend means, we’ll have more of a fo­cus on it than we do now,” said Sen. Ben Cardin, D-Md., a long­time cham­pi­on of un­em­ploy­ment be­ne­fits.

Re­pub­lic­ans may in fact squirm about the plight of the un­em­ployed, par­tic­u­larly from their own con­stitu­ents. But they won’t be­gin any talks about be­ne­fits un­less Demo­crats show that they are will­ing to find a way to pay for the ex­ten­sion. That’s a high open­ing bid, and Demo­crat­ic lead­ers fear the de­mand for off­sets could sink the ne­go­ti­ations be­fore they even be­gin.

“That al­most makes it im­possible,” said Sen­ate Ma­jor­ity Whip Dick Durbin, D-Ill. “It’s so much money. Twenty-five bil­lion. And when I look at what we just went through with this budget agree­ment, it was not an easy lift.”¦ They won’t go to tax loop­holes.”¦ They say, ‘Let’s go to the en­ti­tle­ments,’ and we’re not go­ing to do that.”

Non­ethe­less, Durbin in­dic­ated that Demo­crats would be will­ing to off­set the un­em­ploy­ment ex­ten­sion if they knew Re­pub­lic­ans would ac­cept the deal.

Oth­er Demo­crats, such as Cardin, are wary of set­ting that pre­ced­ent. Al­most all of the long-term un­em­ploy­ment be­ne­fits that passed by Con­gress in the last 10 years have not been off­set be­cause they were con­sidered a net be­ne­fit to the eco­nomy. The ex­cep­tion was in 2009, when the eco­nom­ic-stim­u­lus pack­age in­cluded ex­ten­ded be­ne­fits for the long-term un­em­ployed that were fully paid for. The same ex­ten­sion was re­upped in 2011 and in 2012.

Cardin said those off­sets were a mis­take. “It should not be off­set,” he said. “It’s plug­ging in to the eco­nomy.”

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