Thursday, Colorado Congresswoman Betsy Markey, one of the so-called “blue dog” fiscal conservative members of the Democratic caucus who’s fighting a tough reelection battle in the Fourth Congressional District, was one of 11 Democrats to vote against a bill to extend unemployment benefits for the next four months. The House bill ultimately passed but the Senate version failed and the debate around the bills have given the subject a litmus-test quality.
Detractors have used the bill to make a point about spending and the deficit. Supporters say that calculation may be good politics but it’s bad fiscal policy that punishes jobless Americans who have earned the right to their insurance benefits and that throwing them off the rolls only further hobbles the recovering economy.
“The [unemployment insurance] extension wasn’t paid for,” Markey Spokesman Ben Marter wrote to the Colorado Independent. “The bill spent money without cutting somewhere else. Rep. Markey supported a measure that would have used [stimulus] funds to pay for it, but that measure failed, so the bill went straight to the deficit.”
Marter said Markey’s vote was a “PAYGO issue,” where programs are paid for with available funds rather than with borrowed money.
Analysts like those at the National Employment Law Project (pdf) see the deficit argument against unemployment extension as fiscally misguided. In a cratered job market and with low consumer spending stunting economic recovery, cutting unemployment extension, of all the programs lawmakers could cut, they say, makes no economic or mathematical sense. The $34 billion cost of extending unemployment benefits is a tiny fraction of this year’s budget deficit compared for example to the trillions in deficit spending that goes to the wars in Iraq and Afghanistan and the trillions lost from the Bush tax cuts.
Meantime millions of Americans have already been thrown off the unemployment insurance rolls as lawmakers in Congress and particularly the Senate face off.
The Law Project points out that this approach to economics and the budget is unprecedented and not in a good way:
Never before has Congress cut off benefits when unemployment was so high. Since the 1950s, federal unemployment insurance extensions remained in place during recessionary periods until unemployment dropped to as low as 5.0 percent. The highest unemployment rate at which these extensions were allowed to expire was 7.2 percent, following the 1983 recession— substantially lower than our current rate of 9.7 percent
Businesses of all sizes are not hiring because they do not see sufficient demand for their goods and services. The Federal Reserve is doing its bit, maintaining the federal funds rate—the interest rate at which banks can borrow from the Fed—at near zero for a year and a half, but there is no more room for monetary policy to boost the economy. That leaves fiscal policy—including especially unemployment benefits—as the primary tool government has to increase the demand for goods and services. Alas, enough members of Congress don’t get it.
Colorado’s other “blue dog,” Third District Rep. John Salazar, voted for the unemployment benefits extension.