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By Jose Rodriguez
The non-partisan Congressional Budget Office, out of 11 potential options for Congress, rated unemployment extension as the most likely to stimulate the economy. The least likely: extending the Bush tax cuts, especially for the wealthy. Furthermore, the CBO estimates that every dollar spent on unemployment benefits will generate up to $1.90 in economic activity. Others, such as the Labor Department, argue that there is $2.00 worth of economic activity for every spent dollar. It is a basic fact that people who are unemployed spend every dollar in unemployment insurance that they receive, which fuels economic activity. Conversely, tax cuts for the rich tend to only generate somewhere between 10 and 40 cents of economic activity for every dollar, because the rich tend to save their money, not spend it.
Not extending unemployment benefits would have a deleterious impact on the already slow pace of economic recovery. With current low demand and excess supply, failure to extend unemployment benefits would further contract the economy and make it even more difficult for employers to hire new workers. The CBO estimates that the economy could see a 1% decline in GDP growth and up to one million additional people could lose their jobs. It goes without saying that we would have hundreds of thousands of people fall into poverty. A recent report by the Census Bureau found that over one out of three people cannot “make ends meet” at a basic level. Not extending unemployment insurance to Americans suffering from unemployment during the worst economic crisis since the Great Depression would be a moral outrage.
The suggestion, posited by many conservatives, that people are simply too lazy to get a job would be laughable were it not so incredibly offensive. The Bureau of Labor Statistics released a report last August that indicated that there were five job seekers for every job listing. More specifically, there were 14.6 million people who were unemployed, but only 2.9 million job openings. Those numbers have shifted somewhat in recent months, but the ratio is constant. The misconception that the unemployed are simply lazy reflects a world view that suggests Americans are spoiled and feel entitled. The reality, in this economic crisis, is that Americans are struggling to keep their heads above water. They are struggling to survive. So, the notion that cutting off aid to lazy, spoiled Americans will get them back to work is completely false. Americans want to work, but there are simply not enough jobs.
The American economy is a consumer driven economy. And right now, Americans do not have the money to consume as much as they used to, which has driven demand downward. Now, corporations are sitting on $1.8 trillion. They claim that they have not invested that money for two reasons: there are excess supplies of goods, so there is no need to invest; and their confidence in the economic outlook is keeping them from making any risks in future investments. Others, such as myself, believe that there is a political dynamic, as well. Corporate America has not been happy with the Obama administration’s attempts to regulate the economy, or his desire to end the Bush tax cuts for the rich. Under President Bush, regulations were ignored, regulators were in bed (in some cases literally) with the people they were supposed to be monitoring, and corporations could count on President Bush to side with them. Fareed Zakaria, in a Washington Post column, made this case, as well. In discussions with business leaders, he found that most of them complained more about President Obama than their economic or financial concerns. He found that most of them felt similarly: “… [President Obama] has almost no private-sector experience, that he’s made clear he thinks government and nonprofit work are superior to the private sector. It all added up to a profound sense of distrust.”
It is an agreed fact that during periods of economic booms generous unemployment benefits reduce the incentives for people to find employment. However, we are not currently in a period of economic success. We are crawling out of the bowels of an economic crash. In 2003, in testimony before the Joint Economic Committee, Alan Greenspan made comments about unemployment benefits which can be applied to today’s debate about the issue: “Unemployment insurance is essentially restrictive because it’s been our perception that we don’t want to create incentives for people not to take jobs. But when you’re in a period of job weakness, where it is not a choice on the part of people whether they’re employed or unemployed, then obviously you want to be temporarily generous. We ought to be temporarily generous. And I think that’s what we have done in the past and it has worked well. […]I think that because it is stringent in normal periods, that one should recognize that people who lose jobs not because they did anything and can’t find new ones, you have a different form of problem, which means that you have to allow the unemployment system to be much broader and, indeed, that’s what we need to do.” People who now find themselves unemployed through no fault of their own should not be left out to dry. Not only is it morally indefensible, it is economically unsound.
By Jose Rodriguez
Newt Gingrich, former Speaker of the House and scum-bag who asked his ex-wife for a divorce while she was in a hospital undergoing cancer treatment, is hoping to run for president in 2012.
Asked by the Richmond Times-Dispatch about a possible run in 2012, Gingrich replied, “Callista and I will look seriously and we’ll probably get our family totally engaged, including our two grandchildren, probably in January, 2011.” While he mulls over a presidential bid with his… what? Third wife?… Newt might want to check out the polls. According to a November Quinnipiac poll, he is polling at 15%, which places him behind Sarah Palin, Mitt Romney, and Mike Huckabee.
Meanwhile, Newt might need to see a doctor, because he is suffering from a bad case of foot-in-mouth disease.
During the controversy over the so-called Ground Zero mosque, Newt compared the construction of a mosque several minutes and blocks from Ground Zero to the construction of a Nazi sign outside of the Holocaust museum: “Nazis don’t have the right to put up a sign next to the Holocaust museum in Washington… there is no reason for us to accept a mosque next to the World Trade Center.”
Before that regrettable (to decent people) comment, Gingrich described Sonia Sotomayor (President Obama’s nominee for the Supreme Court) as a racist. He even recommended that President Obama withdraw her name from nomination. The accusation came from a mischaracterization of a speech she gave, during which she used the words “wise Latina woman.” Though he later apologized for using that term, he nevertheless continued to believe the sentiment: “My initial reaction was strong and direct — perhaps too strong and too direct. … Since then, some who want to have an open and honest consideration of Judge Sotomayor’s fitness to serve on the nation’s highest court have been critical of my word choice. … The word ‘racist’ should not have been applied to Judge Sotomayor as a person, even if her words themselves are unacceptable.”
More recently, Newt bought into a ludicrous article by Dinesh D’Souza, which suggested that President Obama is heavily influenced by his father’s “Kenyan, anti-colonial” worldview (since when was being anti-colonial a bad thing?). He went on to say, “This is a person who is fundamentally out of touch with how the world works, who happened to have played a wonderful con, as a result of which he is now president.” According to David Frum, a former Bush aide and speechwriter, Newt’s comments were an example of race-baiting, as well as an attempt to trump his extremist credentials for the radical right-wingers in the TEA Party: “When last was there such a brazen outburst of race-baiting in the service of partisan politics at the national level? George Wallace took more care to sound race-neutral.”
It is not surprising then to hear that Newt blames our economic woes on the lazy unemployed. At a South Carolina event, attended by 250 Republican activists, Newt said, “I’m opposed to giving people money for doing nothing.” What is even sadder is the fact that the audience cheered loudly. In his view, the nation wasted $134 billion dollars on people who “do nothing for 99 weeks” and “got nothing for it.”
Yup. That’s Newt.
So, let’s evaluate his assertion that we “got nothing” for extending unemployment benefits for people out of work.
Let’s first dispel the notion that the unemployed are lazy people who could easily find a job in no time. According to data by the Bureau of Labor Statistics, there is roughly one job for every five unemployed people. There are simply not enough jobs and there are simply too many people looking for work. It is shameful and immoral for anyone to suggest that the unemployed are simply lazy.
Secondly, let’s look at the claim that we “got nothing” for our $134 billion extension of unemployment benefits. According to the non-partisan Congressional Budget Office, every dollar spent on unemployment insurance generates up to $1.90 in economic growth. From a list of 11 options for stimulating the economy, extending unemployment benefits was at number one. Last? Extending the Bush tax cuts, which, according to CBO Director Doug Elmendorf, “would worsen the fiscal outlook” of our economy.
All I can say is this: Good luck, Newt. If comments like the ones you have made over the last year will characterize your presidential campaign, then I will enjoy watching you battle Sarah Palin for the Republican nomination.
It’ll be fun to watch. And, for President Barack Obama, it will be a cake walk to re-election.
The Republicans in Congress have proven that they hate the poor and middle class, but really love the rich. Recently, they allowed unemployment benefits for 2 million people to expire. They have also blocked several attempts by Democrats to continue the Bush tax cuts for the bottom 98% of Americans. Talk about class warfare.
Yet President Obama has not done very much to exploit this. He has, instead, proclaimed that he will work with these people, even though they have bashed him repeatedly. Some Republicans, like Rep. Mike Pence, R-Ind., the third-ranking House Republican, have said that President Obama and the Democrats do not want anyone to get a tax cut, which is a total lie. Pence stated: “Should Democrats get their way, every income tax bracket will increase on Jan. 1, 2011. Every single one.” While it is true all tax brackets will see a tax increase on January 1, 2011, it will not be because of the Democrats. President Obama has made it clear that he wants to see these tax cuts extended for those families making less than $250,000. He has even indicated that he is willing to make a deal with GOP leaders. The Democrats in Congress have attempted several times to extend the Bush tax cuts for the bottom 98% of Americans, but Republicans like Pence have blocked those pieces of legislation.
Why? Because they exclude the rich. The top 2% of income earners do not need unemployment, so why pass an extension? The top 2% need a tax cut, so why exclude them? This debate only underscores their affinity for the wealthy. They try to cover this by claiming that they are fighting for small business owners. They argue, with no one in the White House really disputing them, that they are trying to stand up for those who are in need of a job, so they cannot fathom a tax hike on the job creators. All of this is a load of crap.
First of all, only 3% of small business owners would be affected by the so-called “tax hike.” Most small business owners do not make $250,000 in profit.
Secondly, the Republicans just blocked the passage of tax cuts for 98% of Americans, just so the top 2% can have $100,000 tax cuts. They are doing this at the same time they are saying that we cannot afford an extension of unemployment benefits and demanding that we start lowering the deficit. It’s hypocrisy and blatant favoritism of the rich. A recent CBO study found that for every dollar spent through unemployment benefits there is as much as $1.90 put into the economy. A dollar spent by the rich from the tax cuts generates somewhere between 10 and forty cents . In fact, the CBO found that extending unemployment benefits would be the best stimulus for our economy, while extending the Bush tax cuts was dead last.
Thirdly, as for it being a “tax hike,” these were tax cuts that were set by President Bush and the Republicans to expire at the end of 2010. These were not implemented as permanent rates, but a temporary tax gimmick to gin up support. Dan Bartlet, a former Bush White House Communications Director, admitted that they deliberately used the tax cut deadline as a trap for future political leaders: “The fact that we were able to lay the trap does feel pretty good, to tell you the truth.”
And lastly, it is a falsehood to suggest that not extending the tax cuts for the rich would have an impact on jobs. When President Bush first introduced the tax cuts, he argued that it would create jobs. Over his eight year term, the economy only added 2.4 million jobs. In Clinton’s first budget, he increased taxes for the rich. By the end of his eight year term, the economy added over 23 million jobs . This is a fact: job creators are motivated by demand. That’s economics 101. As it stands now, the business sector is sitting on 2 trillion dollars, which they are not spending. Why? Because they have excess supply. People do not have the money to purchase things as they have in the past, which is causing this recovery to move sluggishly. So, money is not the problem: demand is. It’s a vicious cycle: many people are out of work or are tightening their fiscal belts, so they do not consume as much, which causes businesses to have excess supply, which then prevents them from investing in their company, precluding any additional employment. And the cycle begins again.
This is why extending unemployment benefits is so important. Not doing so is a job killer. People who are unemployed spend the money they receive, which goes to businesses. Now that 2 million people are not going to be receiving unemployment benefits they will be tightening their fiscal belts even more, which will lead to even more excess supply and less demand. This will create a situation that will make it even harder for the business sector employ people.
But some people would rather pretend that giving the top 2% of income earners a tax cut will create jobs. It won’t.
In the final analysis, it becomes evident that any time the poor or middle class need some help the Republicans can be counted on to ignore their pleas. You get some millionaires and billionaires complaining that they cannot afford to maintain their fifth house or buy the small island they wanted the Republicans are there to lend a helping hand. They like to play the “We feel your pain” game, but they are only doing so in order to score political points. If they really cared, they would have voted for the extension of tax cuts for 98% of Americans and for extending unemployment benefits.
It’s not just the moral thing to do: it’s smart economics.