Business & Economics

Why Congress must extend jobless benefits for hard-hit families but not tax cuts for the rich

Robert Reich

America’s long-term unemployed — an estimated 4 million or more — constitute the single newest and biggest social problem facing America.

Now their unemployment benefits are about to run out, and the lame-duck Congress may not have the votes to extend them. (You can forget about the next Congress.)

The long-term unemployed can’t get work because there are still five people needing work for every job opening. And the long-term jobless are often at the end of the job line: Either they don’t have the right skills or enough eduction, or have been out of work so long prospective employers are nervous about hiring them.

They’re also a big problem for the economy. Without enough money in their pockets, they and their families can’t pay their mortgages, which keeps fueling the mortgage crisis. Nor can they replace worn-out cars and clothing, or buy muchof anything else, which is a drag on the economy.

Republicans and many blue-dog Dems say we can’t afford another extension.

But these are many of the same people who say we should extend the Bush tax cuts for the wealthy for at least another two years.

Extending the Bush tax cuts for the top 1 percent would cost an estimated $120 billion over the next two years. That’s more than another unemployment benefit extension would cost.

The unemployed need the money. The rich don’t.

Moreover, the top 1 percent spends a small fraction of their income. That’s what it means to be rich — you already have most of what you want. So extending the Bush tax cut to them won’t stimulate the economy.

Yet people without jobs, and their families, are likely to spend every penny of unemployment benefits they receive. That will go back into the economy and save or create jobs.

A Labor Department report shows that for every $1 spent on unemployment insurance, $2 are spent in the economy. If you don’t believe the Labor Department, maybe you’ll believe Goldman Sachs analyst Alec Phillips, who estimates that if unemployment benefits are allowed to expire, the American economy would slow by a half a percent.

Republicans are still spouting nutty Social Darwinism. Cutting taxes on the rich is better than helping the unemployed, they say, because the rich will create jobs with their extra money while giving money to the unemployed reduces their desire to look for work.

Rubbish. The Bush tax cuts on the top never trickled down. Between 2002 and 2007 the median wage dropped, adjusted for inflation. And job growth was pathetic.

Jobless benefits don’t deter the unemployed from finding work. In most states, unemployment benefits are a fraction of former wages. And as long as unemployment remains sky-high, there are no jobs to be had anyway.

Besides, the economic downturn was hardly their fault. If anyone is to blame it’s the high-flyers on Wall Street who gambled away other people’s money, and the rich denizens of corporate executive suites who have sliced payrolls in order to show higher profits (and get more money from their stock options).

So why reward the people at the top with an extension of the Bush tax cut that will blow a hole in the budget deficit? And why fail to extend jobless benefits to hardworking Americans who got the boot?

Quick action is needed. Jobless benefits begin to lapse in just two weeks. Two million unemployed workers will be affected. If Congress fails to act, another 1.2 million will stop receiving benefits by the end of December. Most of the rest of those who now receive federal emergency extended benefits will gradually lose them.

Don’t extend the Bush tax cuts to the wealthy. Give unemployment benefits to people who need them.

Cross-posted from Robert Reich’s blog.

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Comments to "Why Congress must extend jobless benefits for hard-hit families but not tax cuts for the rich":
    • Carl Williams

      James and Milha’s
      You are both bright and eloquent,why not forge a
      friendship? Use that drive we all posses to solve rather than polarize.
      You both have valid and controversial views. Sharing borders with each other with the kind of Venom displayed here can lead to blood shed. World wide migration is a true fact of the twenty first century. Adapt!

      [Report abuse]

    • shinnok

      “How about an immigration moratorium and a rescission of all Green Card holders’ privilege to work. That will literally free up millions of jobs.”

      Most of those immigrants are coming in to do menial jobs for those very rich the GOP protects. They cook, do their household work, their gardens etc. (see Lou Dobbs, Whitman.) Someday, middle class GOP’ers will put aside their racism and see their party for what it truly is.

      [Report abuse]

    • Douglas Keachie

      We have roughly six million millionaires in this country. If each employed two workers, cleaning their yards, painting house numbers oon curbs, or whatever, it would go a long way to solving the problem. You want to keep your tax cut? You hire some people, FIRST! The trickle down somehow seems to get frozen in the pipes somewhere, and until the pipes are certifiably clear, no tax breaks for those who’ve been on the lucky side of the table of hard work, and yes, you betcha, there is an unlucky side of that table.

      If all of the Republicans, and all of the Dems, can’t put Humpty Economy back together again, then what?

      [Report abuse]

    • Bsmiles

      “Then of course we have the closet eugenicists… (James R.?) who always fault ‘”them aliens, who rip us of our jobs…Nothing changed, be it the Nineteen Century Irish…..”
      James R is correct, most nationalities either came as slaves (definitely not preferred) or through Ellis island. If you have not had a good paying job with benefits taken away and given to an illegal immigrant(with reduced pay and no benefits) then you don’t understand.

      “The unemployed need the money. The rich don’t.”
      re: unemployment benefits The unemployed would immediately spend the money on necessities of life: shelter, food and clothing, commodities supplied by local small businesses. The rich can afford to wait for prices to go rock bottom.

      Come on America wake-up say No to the Bush tax cuts for the wealthy.

      [Report abuse]

    • Milha Mann

      Thank you Dr. Reich for your consistent common sense and the unremitting voice in the wilderness…!
      The Conservatives and their Republicans ilk, are enchanted and love the practices of the laws of the jungle. Hey everyone, we have gotten out of the jungle millenniums ago…heck, we visited the moon…!

      The conservatives, the Republicans, are devoted ideologues and practitioners of pure and simple social Darwinism. They love to cloak their anti-christian lack of compassion with “scholarly” shibboleths such “… unemployment ( Insurance by the way not charity…) benefits contradict human nature… The merchants and the money changer are suddenly experts in human behavior. How often do we hear from them loudly or silently ,from them who really know squat about human nature… ” Oh you know, humans are lazy by nature…people rather stay idle and get freebies, rather than look for gainful work…” In matter of facts, all contemporary, bonafide human behavior researchers and scientists, those who spent eons studying the human brain,the Human mind and the Human social phenomenon, (Those serious and dedicated investigators who are usually are quite humble opining about “Human nature”…) have an utterly different and opposite view. It is now generally accepted, amongst contemporary human behavior scientists and subject crudites, that human brains, as well as the central nervous systems, exhibit an innate organic craving for productivity and creativity. Our brains are least disturbed when active and intensely engaged. It is natural for humans to want to work, to function, to create to contribute, not to mention the very basic and compulsive wish to sustain their own. it is in our genes. Woe to the economic systems that make it difficult if not impossible…!

      Then of course we have the closet eugenicists… (James R.?) who always fault ‘”them aliens, who rip us of our jobs…Nothing changed, be it the Nineteen Century Irish and Chinks or Twenty Century Italians and Jews… Be it in America, or Nazi Germany, it is always the same, it them foreigners…!

      WHEN WILL THEY EVER LEARN?

      [Report abuse]

    • James R

      Milha’s thinking is a mess, filled with left wing platitudes, a lame appeal to Christian morality, and pseudo-neuro-scientific gobbledygook. Unfortunately it’s devoid of hard data from social scientists or economists. Here is the math: our economy is barely growing. At the current rate of job creation, it will take at least 10 years just to recover all the jobs lost in the Great Recession triggered by a Housing bubble caused by heavy real estate speculation in about five of the most heavily immigrant states, California being one of them. In the meantime, 10 to 20 million more immigrants will flood into the job market. That means we go from 4 million chronically unemployed people in the US to over 14 million. On the other hand, if we halted all immigration, and sent home to Mexico the 20 million Mexican laborers and family members who came here to make money during the real estate bubble, it’s a certainty that wages for low skill labor will improve, the unemployment rate might come back down to something like 6%, and the social safety net might remain intact for citizens who have paid to support it for decades.

      Milha’s silly quip the I might be a eugenicist, then use some creative dialog to make me sound like a hick, suggests a rather non-serious intellect. “Hey, since I can’t answer this guy on the facts, why not personally attack him?”

      [Report abuse]

    • James R

      “America’s long-term unemployed — an estimated 4 million or more — constitute the single newest and biggest social problem facing America.”

      And yet we import over a million immigrants every year who inevitably either displace Americans in the US job market or join the ranks of the long term unemployed.

      How about an immigration moratorium and a rescission of all Green Card holders’ privilege to work. That will literally free up millions of jobs.

      [Report abuse]

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