In retrospect, a significant policy and political mistake made by Democrats back in early 2009 was to ever start adopting only temporary extensions of unemployment. The result has been that, over the past two years, the need for a series of temporary extensions of unemployment. Eventually, these temporary extension become political footballs that suck up valuable senate floor time and become victims of general deficit hysteria. Recently, a one -year extension of unemployment became one of the only big concessions Obama got in the tax deal.
I do believe with nearly 10 percent unemployment, the government should provide more aid to those who lose their jobs, but it shouldn’t have been provided by a series of legislative band-aids. In hindsight, with clear indications that unemployment could remain well above normal for years, instead of passing several temporary extensions, Democrats should have passed a single reform of unemployment insurance. They should have written the law so that it would have provided the same level of extended benefits these temporary extensions did, but created a permanent formula that automatically increases unemployment benefits based on employment rates.
That would have eliminated the repeated political battles, and made UI something needing concessions from Democrats to pass more extensions.
I don’t really blame Democrats for making this mistake. Even in early 2009, it would be hard to predict that extending unemployment benefits would become a real battle with the near 10 percent unemployment, or that virtually every moderate Republican would join in holding extensions hostage. It is something that is only easy to realize in retrospect, but should be a lesson moving forward.
In the future, progressives should work harder to make things like unemployment benefits more like automatic stabilizers that won’t be subject to the random political whims of a single Sen. Jim Bunning or an across-the-board filibuster about a completely unrelated manner.
It is a reminder that, in the long run, it is often easier to just do things right the first time instead of repeatedly coming back to fix them. Is there anyone who thinks Democrats would have been politically worse off if, in March of 2009, they had passed a more permanent reform of unemployment at a somewhat higher price tag instead of a half-dozen temporary extensions. Governing by endless temporary fixes, especially with the current filibuster option always looming, leaves too much room for hostage-taking.




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Would a permanent UI measure have passed the Senate? Seems vanishingly unlikely.
In retrospect, it’s a good idea. There were enough things that the Democratic leadership bobbled that they can be blamed for. Things like the Republicans’ obstructionism could have been foreseen and avoided. That might have made the unemployment insurance thing less of a problem.
Still, it would be nice if the government had extra motivation to keep unemployment low, and extra costs that temporary government projects to reduce unemployment could offset.
U6 measure shows 17% un- and underemployment. A more accurate figure.
Sorry, Jon, but I don’t believe this would ever be considered by Democrats, even a year ago. The writing is on the wall and was starting to be apparent even back then–the long-term unemployed are lazy and shiftless and anyone unemployed after 6 months should be written off, as the long-term unemployed are being written off now in terms of further employment. Discarding resumes from the unemployed is considered good business practice. No one, politicians most of all, wants to admit the depth of the problem we are facing, and denial is the easiest means of avoidance. You’re assuming politicians actually want to work for the general welfare, and the last two years have shown me that not a damned one of them is interested in anything beyond their reelection. Sorry for the rant, but the trend has been to dismantle the social safety net for years now; I’m just amazed we’ve still got unemployment benefits at all beyond 6 months.
Like you said, Jon,
Like Medicare (not counting the serial “doc fix” patches). Like Social Security (contrary to Obama’s urban myth that it required major structural patchwork along the way — no it didn’t).
When you combine this crucial fundamental point with the “partisan overreach” framing in the prior thread, it seems very clear that it is very often more important NOT to bring an issue to the floor of Congress if the result will be fucked up and only partial success (such as health insurance reform, perhaps?). Knowing that, it becomes even more important to pin down our latest progressive hero-of-the-moment on the precise details of their proposed laws, to demand essential structural components ahead of time as the price for our political support, and to accept no compromises.
Our enemies never compromise. That’s the bottom line. We either do stuff right or don’t do it at all. We back candidates who will go to the mattresses using that framework, or we don’t back anyone. We don’t rely on anyone’s promises to “work out the details after the election,” we get the details straight as a condition of election support. We don’t do victory laps for fake achievements which do nothing to solve structural defects.
What’s new? This whole damn country has been running on ‘temporary fixes’ for at least 30 years.
There were only 27 states that qualified for an unemployment benefit extension of up to 99 total weeks, and of course nothing for the 99′ers. So it’s really a half measure of a half measure. That’s all the unemployed middle-class gets after picking up the tab for the bail-out created by the criminal fraud of the wealthy elite. But you know the wealthy elite got their full unadulterated tax cut extensions (2years) and estate tax exemptions.
a total abomination. We should be studying the floor debate in the House to appreciate how truly historically terrible that deal was. DeFazio was my hero.
When this happened in the 70s you recieved money until the numbers were down to 5% it wasn’t Oh maybe we help maybe we won’t shit. I also find it hard to believe in the govt. approved # of 10%. The real numbers stopped being produced a long time ago so govt. leaders could look good and to hell with the people. Yep enough greenbacks to give the rich even more but nothing for the 99ers and there will be even less with o new friends coming the new congress.
Yep just go and die already.
When this happened in the 70s you received money until the numbers were down to 5%…
Yeah, that’s what I was going to suggest, didn’t know they did that back then. Warren Mosler (if you haven’t read his excellent book,its a free download) has made the point vis a vis monetary policy, that the Fed can set quantity the money or it can set the price of money (that is, the Federal Funds interest rate), but it can’t set both. Over the years, the Fed has found that the best way to manage monetary policy is by setting the price of money and letting the quantity take care of itself. Inexplicably, Bernanke is using quantity and not price in his Quantitative Easement. but that’s another story.
That’s how the federal budget should be managed by, price (i.e. the unemployment rate), and not quantity of money spent. For items like UI extension, waiving the statutory debt limit or a payroll tax holiday (Mosler has been calling for a full 15.3% FICA tax holiday since 2008), they should last until the economy is on its way to full employment, 5% is as good a threshold as any.
It would require the President explaining to the public from day one how the economy works (and that, ultimately, Darth Vader was right, “deficits don’t matter”), but before that can happen, someone would have to explain to the President how the economy works. In the meantime, one alternative to UI extensions is direct govt job creation (what Steven Attewell calls job insurance). That was actually the intent of the original Social Security (CES) report— UI for short-term unemployed, “employment assurance” public jobs for long-term unemployed. (EA is listed first in the “Summary of Major Recommendations).
http://www.ssa.gov/history/reports/ces5.html
Thanks for the kind words!
Let me add that the Fed can only set interest rates, and not the quantity of net financial assets.
Yes, it can adjust the mix between tsy securities, reserves, and cash in circulation, but not the sum of those three.
And all three are but alternative liabilities of the federal gov.
Warren Mosler
http://www.moslereconomics.com
That link took me to item that they wanted me to pay $20 for.