March 4, 2010

Time to Make the Necessary Policy Shift on Jobs

Justin Katz

Kentucky Republican Sen. Jim Bunning's hold-up of unfunded government spending has ended, and probably without the lesson learned, although coverage of the effects did point the way:

Unemployment benefits will begin phasing out for thousands of out-of-work Rhode Islanders starting Monday, the result of Congress’ failure to pass a temporary benefits-extension bill late Thursday night.

Another result is that about 2,000 unemployed people will run out of benefits altogether between now and late July, state Department of Labor and Training officials said Friday. ...

Thus, instead of being potentially eligible for up to 99 weeks of benefits overall, they will generally be capped at 46 weeks, Hart and Filippone said.

Why are we considering it tolerable that Americans are requiring unemployment benefits for almost two years? And how much longer should we attempt to sustain such spending before shifting people to a system that's set up for longer-term care? At some point, it ceases to be unemployment and becomes welfare.

Turn to a related angle, the loans that are financing local unemployment:

Rhode Island employers will have to pay an extra $39 million in unemployment tax next year, a side effect of the state’s high jobless rate. ...

The tax increase will come as employers continue to struggle amid a nagging recession. It will be in addition to the high unemployment taxes they now pay, said Grafton H. "Cap" Willey IV, co-chairman of the Rhode Island chapter of the Smaller Business Association of New England, an advocacy group for small business. "It's a tremendous burden," said Willey, who is also a managing director of CBIZ Tofias, a CPA firm with offices in Providence and Newport.

At issue is a tax that employers must pay to the state unemployment insurance trust fund, which in turn pays benefits to out-of-work Rhode Islanders. As the jobless rate has climbed, demand for benefits has risen, draining the fund. As a result, the fund has been borrowing from Uncle Sam for the past year to help cover benefit payments.

The longer this goes on, the more difficult it will be, because the burden of the debt will grow precisely on those who need it to be relieved in order to get the economy rolling again. As we've watched, in Rhode Island, for most of the past decade, government officials are merely trying to maintain the status quo while awaiting some miraculous change that will fix their problems. It doesn't work that way.

The money to cover unemployment benefits must come from somewhere other than employers, and it must not initiate new taxes. In other words, the governments of Rhode Island and of the United States must lay their expenditures out across the table and divvy up the shrinking revenue as well as they can, prioritizing economic growth. They must also take the much less financially difficult step of loosening the chains that they've laid upon the various industries, from farming to healthcare.

Government officials won't take such steps, though. In Rhode Island, they're too myopic to look beyond their own standing. At the federal level, the Democrats are trying to shove as much of their long-term agenda into law as they can, and any policy disruption will have to wait, even if it continues to translate into economic depression.

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Brilliant logic - one might think you are a computer programmer as opposed to being someone who rants on a blog!
After all, remember that it is the FAULT OF THE WORKING STIFF who has lost their is their fault that the Bankers, Wall Street and Bush/Cheney and their wars destroyed our economy. So now, instead of keeping those poor slobs in their houses for a few more months, you want them to learn their lessons the hard way! The Jim Bunning method.....yeah, a multi-millionaire sports figure who makes his money signing baseballs. Well, my friend, we can't all do that! Some of us are machinists, carpenters, retailers and others who have been sunk because of the stupid policies of folks like Bunning and GOP friends. Now that we have been thrown out of work, lost 1/2 our pension money, and had to send our children off to fight wars for oil and power - NOW, you are ready to make us sleep under the teach us a lesson, eh?
Tell you what, bunky! Let me teach you one. Until you walked in the shoes of others for many decades, it's better not to spit upon those who fortune is not smiling upon today. It's call the Golden Rule, and hopefully they teach that on the right.

Funny how the rabid righties cheered "support the troops" while 1-2 trillion dollars of DEBT was spent, and yet now will not five 1/100 of that amount to the working families of this country.

To that type of world view I say loudly - NO. That type of "me me me me" attitude should have ended in the 80'.

Posted by: Stuart at March 4, 2010 4:32 PM

A sobering article.

Don't these observations beg the everpresent question of the effects of illegal immigration (and the employment of those illegal aliens) on the local (and federal) economy?

Imposing additional taxes on employers, now, is astonishingly stupid.

Posted by: Bill at March 4, 2010 4:34 PM

Always remember, my friend, that "illegal immigration" is something that is fostered by those same employers and business leaders. I know this for a fact - employers like having the lower priced workers and also to be able to take more advantage of those workers. An illegal does not have many bargaining points with their boss!
Everyone in the business community, from the small restauranteur or construction company to the large agri-business and chicken plants...benefit.

Once every couple of years, the pols try to tackle immigration - McCain and Kennedy even tried it when Bush was Prez. But then the rabid right get's all worked up because the bill is not perfect....and the bill dies.
Always remember that the perfect is the enemy of the good.

Personally, I would have let McCain and Kennedy (with Bush signing it) attempt to fix the problem. But you cannot complain if you don't let them start to fix it.

I think it is a matter of priorities. It's hard to imagine that ALL the working people out of a job in this country - through no fault of their own - aren't worth 1/100 of what we spend on largely fruitless foreign adventures. It's time to spend HERE rather than THERE. I'm sure we've given a LOT of jobs to a lot of Iraqis and Afghans.

Posted by: Stuart at March 4, 2010 5:34 PM


You're missing the point. It's not about claiming that the economy is "the fault of the working stiff" or about disclaiming the value of the American worker. It's a matter of acknowledging that an active economy is the only sustainable way to support so many people and not drowning recovery in the repercussions of the downturn.

Posted by: Justin Katz at March 4, 2010 6:35 PM

Thanks Stuart,
You nailed it very well. I remember the Katzenjammer Kid insisting that the Bush/Cheney run to war in Iraq was the proper way to go. Couple an unfunded war with tax cuts and you get what we got. Incidentally those tax cuts did a great job spurring industrial development didn't they.

Posted by: OldTimeLefty at March 4, 2010 6:43 PM

The current social safety net system for employment woes is 100% unproductive.

The government could easily mandate that the unemployed work say 20 hours a week in exchange for their benefits.

Posted by: doughboys at March 4, 2010 7:11 PM

So, the plumber who is out of work should pick up litter along the shoreline, paid for and overseen by the government?

That is a crazy thought! Anyone with business experience will tell you that it would cost MORE to put that person to work...than they would produce. That is known as debt or deficit or bankrupt......

Justin, since you seem to be very wrong on most major issues (Iraq, etc.), let me try to help you with a voice of experience. I have been through a number of decades of business and life experience and can tell you just a bit about economics - stuff you will not hear from radio talk shows, or WND.

First of all, this Great Recession will be felt for 10-20 years. There is little you can do to tweak that one way or another with these brilliant ideas about putting people on chain gangs. The damage is mostly already done - we are now all reduced, mad max style, to fighting over the scraps.
If you were a real thinker or a real patriot, you would be writing 3/4 o your posts about how we can avoid this big of a Depression in the future. That would involve calling out the folks mostly responsible - that is, the Bush regime and Phil Graham and Enron and the Neo-cons and Wall Street deregulation and so-on.
But I don't see a lot of that here? Why? How can you give a free pass to all the history, and then act like if we just put the SAME (Bush/Cheney/Neo-Con/Goldwater/JBS/Heritage Foundation/Cato Institute, etc.) policies into account MORE...then all would be well?
It does not make sense. Repeat - it only makes sense if, like you, ones mind is already made up and they then use those foregone conclusions to measure every event that happens.

I'm certain you look at the world and it fits perfectly into that box....which you have bought as your philosophy. But stand back a bit. Scientologists - very smart and successful people - believe we have aliens inside us! Most GOP Presidential candidate think the earth and universe was created 6 to 10,000 years ago. They too see everything as fitting perfectly into those views.

Hopefully you are still young and inquisitive enough to actually clear out your preconceptions and see what is really happening. It's not pretty, but it beats blinders.
Thanks for listening.

Posted by: Stuart at March 4, 2010 7:44 PM

Stuart, brevity is a virtue. Or in internet speak: tl; dr

"After all, remember that it is the FAULT OF THE WORKING STIFF who has lost their is their fault that the Bankers, Wall Street and Bush/Cheney and their wars destroyed our economy."

Hmm, I thought public spending in WW2 brought us out of the Great Depression through Keynesian economics. Now Bush's wars destroyed the economy. Which is it, progressives?

Posted by: Dan at March 4, 2010 10:29 PM

Well, Danny boy, since you want to go back.....

Let's start at the GOP led and caused Great Depression, which we should not have had, but was driven by a similar lack of regulation as the current one. That one was also large, and lasted a decade or longer. WWII, or more specially, the END of WWII brought us out of that. That was about 15 years, so you can see where I got my 10-20 years from.

Of course, you can continue to sing the praises of FDR, rated by all historians as one of the best Presidents of all time. He was, of course, a dem.....and a progressive, and won the biggest war in history, and brought us out of the depression by other policies, and also set up a bunch of systems and laws to prevent another one!

But then Bush and friends decided to remove most of those regulations and also stop watching (wink wink) and allowed the conditions to occur for a second depression!

The idea that sending our sons and daughters to kill and good for the sick and dangerous. It just might have been that the great industrial step forward and the bringing of women into the work force and mass production, etc. which accompanied the WWII expansion carried over into our general economy.

These days the war money does to contractors, haliburton, think tanks and blackwater. Plus, here is a breaking news story - our soldiers don't work for privates pay any longer and they don't peel potatoes. Instead, they get starbucks, burger king and internet service. The salary and bennies of a lowly soldier is 114K a year average. It then costs as much as million dollars per person to keep them in hots and cots in Afghanistan.

Many empires throughout history including the brits, the french and more recently the ruskies...have been broken by their military adventurism. Heck, we are still paying debts for Vietnam. that the wars have proven wrong, the right tries to fish for a positive.....sorry, there is none.

Posted by: Stuart at March 4, 2010 10:51 PM

I see that Stuart, the armchair historian and economist, is well-versed in revisionist public high school US history. Let me know when you can actually articulate Keynes's General Theory, Stuart, then we'll have something to discuss besides sweeping political generalities about Democrats and Republicans. By the way, I dislike Republicans as much as I dislike Democrats, but I think you are a bit confused as to which party has traditionally been the "war party" of the last 100 years.

Posted by: Dan at March 4, 2010 11:20 PM

Hey Danny Boy....


IKE would have been against all this excess military spending and foreign adventures. He would have been FOR putting money into domestic policy. That is why his daughter, an accomplished expert in foreign affairs, backed Obama.

You can reach back...I know enough about history to know about LBJ and Vietnam, etc.......

However, that does not negate that Bush and the neo-cons and the same general tea party types got us into the current mess and still beat their chest for more war. That is clear.

Posted by: Stuart at March 5, 2010 4:16 PM

Stuart-the neocons didn't send their sons and daughters over to fight.I would think many Tea Party people did.FWIW I'm not a Tea Partier,but agree with most of their points.

Posted by: joe bernstein at March 5, 2010 9:39 PM
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