Ever watch a parent lecture a demanding child about self-discipline -- then give him everything he asks for? That's the pattern Congress is falling into.
Beleaguered governors and advocates for the jobless have been pleading with Congress to extend unemployment insurance, for at least the sixth time since 2008. Capitol Hill obliged today, passing a $34 billion plan to distribute added unemployment compensation through November for those who have exhausted their standard 26 weeks of aid.
There are two basic views, which both have merit if you strip away the odious political posturing that sickens voters. President Barack Obama and Democrats in Congress pushed an extension of benefits to ease the misery of the 2 million people who have been unemployed so long that they've exhausted the 26 weeks of benefits available in most states, plus various extensions. With unemployment at a shockingly high 9.5%, that seems only humane.
Senate Republicans argued that the cost of an extension is more than America can afford; they wanted Congress to find a way to pay for another round of subsidies. That seems reasonable too.
With the recession supposedly over and the national debt forming a giant anvil hanging over the economy, what's wrong with paying for spending programs in real time? Surely Congress can cut agriculture subsidies or dreamy weapons programs or other boondoggles, in order to help millions of Americans in need. The Congressional Budget Office has even provided a handy list of 188 ways to cut spending and raise revenue (.pdf file). Just pick a few.
Like other problems facing Washington, this shouldn't be that hard to resolve. But the inevitable outcome will be like all the others: Congress will defer a real solution, jack up the debt yet again and continue to tell voters they can have something for nothing.
And voters will return the favor by continuing to insist on smaller government -- as long as their own favorite subsidies remain in place.
It can't go on. Our entire concept of what the government should do for us has become a fantasy, with most Americans feeling entitled to a lot more than the government -- we taxpayers -- can afford.
In coming years this will inevitably impact recipients of Medicare, Social Security, Medicaid and many other government payments. In other words, mostly everybody. At the moment, the battle over unemployment benefits represents an instructive microcosm of fiscal dysfunction that's only going to get worse.
How many more extensions?
Since 2008, Congress has boosted unemployment insurance from the usual 26 weeks to as much as 99 weeks for people in the worst-hit states. The standard payout is funded by a tax on companies in most states. But extensions aren't, and various extensions since 2008 have added at least $65 billion to the national debt.It's appropriate to help the needy during an awful recession, and there's general agreement that the government should borrow and spend more during a downturn to fill the hole left when private spending drops off. But that traditional Keynesian view also requires the government to rein in spending when things improve, and pay off its debt. That part we don't believe in so much anymore.
It's becoming obvious that we need a coherent long-term plan for what to do about prolonged joblessness, instead of continual ad-hockery. If Washington can no longer cover the expense of expanded benefits, Congress should say so definitively, so governors can make other plans and the unemployed can stop looking to Uncle Sam as a savior.
To its credit, that's what Congress did with the cash-for-clunkers rebates last year, and with the homebuyer tax credit that was extended once but phased out in April. So far, however, Congress keeps pretending the economy will get better in a few months -- and playing a cruel game of chicken with unemployed Americans on the verge of losing their homes and livelihoods.
A bridge loan to be repaid?
If extending benefits indefinitely is the right way to go, then it's time to decide how to pay for all the aid. Once the economy is in better shape, will those who benefitted from the extensions view them as loans that helped them survive lean times, and be willing to pay them back through a tax hike? That's highly doubtful, especially since Obama has promised there will be no middle-class tax hikes on his watch, no matter how many additional benefits accrue to the middle class. Still, if it's so important to extend aid to the jobless, then we should be willing to take the money from someplace else instead of waving the magic deficit wand.It might even be time to start asking the middle class for something back. Maybe certain types of aid should be designated as bridge loans that must be paid back, like student loans, instead of grants that come with no strings attached. And how about some metrics that govern when various benefits go into effect and expire? They could be pegged to the unemployment rate or other economic indicators, reducing the need for arbitrary decisions about extensions -- and the political vitriol that goes with them.
There's another concern about whether indefinite extensions of aid discourage people from finding a job, depress economic activity and foment a growing welfare state. It's grossly inaccurate to label everybody who's unemployed as a happy recipient of handouts. But 99 weeks of aid -- nearly two years' worth -- is an extraordinary subsidy that has to have some unintended consequences, beyond simply helping people weather a storm. Congress is handing over a lot of taxpayer cash without a clear understanding of the effect it will have.
We're in the midst of a fiscal shell game in which states that have run out of money and cut their own programs to the bone are begging the federal government for aid so they can extend jobless benefits and lots of other subsidies. Unlike the states, the federal government can borrow indefinitely, and since it can, it does.
But we all need to pay that back, so running a federal deficit in order to spare people who live in states and cities is about as effective as moving the family bills from the kitchen to the basement. Even if you don't see them as often, they're just as onerous. And if you simply ignore them, maybe worse.
