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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