For weeks, Senate Democrats have tried to pass what’s called the “tax-extenders bill” — a key economic package that extends unemployment benefits, maintains popular tax breaks, protects doctors from Medicare cuts, and boosts state aid to prevent massive job layoffs in the states. The country needs this bill to pass, but Republicans won’t let it come up for a vote.
In the hopes of finding a compromise, Dems have repeatedly scaled-back the measure, watering it down and removing worthwhile investments. The GOP has responded by insisting the reductions aren’t enough, and that they still won’t allow a vote.
It now appears Republicans are going to win this fight — and Americans will lose.
Before talking about what’s happened to the Senate jobs bill, it’s worth first talking about what’s in the Senate jobs bill.
The biggest and most important item is the extension of unemployment insurance. This comes in a few different parts: One part extends the insurance programs that deal with the long-term unemployed. Another extends the $25 boost to unemployment insurance checks that we’ve had in place since the beginning of the recession. And a third allows workers who find part-time work but need full-time work to remain eligible for some unemployment benefits.
Then there’s the extension of the federal government’s program to help states pay for Medicaid costs. During recessions, more people need Medicaid, which increases the program’s cost, but state revenues drop, which reduces their ability to pay for the program. So the federal government, which can run temporary deficits, steps in and increases the share of the program’s costs that it pays. This bill extends that program. The bill also includes another temporary fix to Medicare’s doctor payments.
The bill also has a raft of tax cuts and investments, including billions for the Small Business Administration to offer more loans to small businesses, bonds to fund infrastructure development, money to encourage private-sector R&D. and more. A full list of the bill’s provisions, and its subsequent modifications, can be found here.
Those modification documents are important, because Democrats have made a lot of changes to the bill in response to Republican opposition. The total cost went from $200 billion to about $110 billion. The bill went from being deficit-funded — which is what you want for stimulus — to largely paid for, with only the $30 billion or so in unemployment benefits adding to the deficit. The $25 addition to unemployment checks was eliminated, and states now have to pay more for Medicaid, adding to their budget woes. The bill, in other words, has been made smaller and weaker. And that’s despite 9.7 percent unemployment.
Joan McCarter at Daily Kos:
Governors and state legislatures in some 30 states have already budgeted for this funding, a huge portion of most states’ budgets. A KFF report [pdf] last year found that “Medicaid is the second largest line item in state budgets following elementary and secondary education. Presently, 17 percent of state funds are allocated to Medicaid on average and it is the largest source of revenue in the form of federal grant support to each state.”
It also found that decreases in funding “reduce the flow of dollars to hospitals, nursing homes, home health agencies and pharmacies, and reduce the amount of money circulating through the economy, affecting employment, income, state tax revenue and economic output.” When you hear that as many as 200,000 jobs (the CBPP says it’s up to 900,000) could be lost if this funding is not passed, these are the jobs in question. For the graphically inclined, this is what it looks like.
What happens without it? Lost jobs and state budgets cut to the bone. That’s just on the on the Medicaid funding front. It doesn’t even touch the 903,000 who have prematurely lost their unemployment benefits. That number will be 1.2 million as of Friday. It’s not only incredibly cruel of our Congress to fail each and every one of those 1.2 million–and their family members–it’s cutting any economic recovery we’re experiencing off at the knees.
“We are in a situation where unemployment benefits could have a lot of value,” said Jesse Rothstein, chief economist at the U.S. Department of Labor, who described the current 9.9% rate of unemployment as “absurdly high.” Rothstein cited a study from the Congressional Budget Office that ranked unemployment insurance as the most effective form of economic stimulus and explained, “If you give money to someone who is unemployed, they are going to spend it the next day.” Rothstein pointed out that the rise of long-term unemployment is due to a severe shortfall in consumer demand and an economy producing far less than its potential.
The estimate from the CBO is that unemployment benefits create $1.93 in GDP for every $1 in benefits.
Even this drastically reduced plan needs to pass, but at this point that’s not looking likely. The votes that could swing on this–that have to swing on this–are Republicans. Voinovich, Brown, Snowe and Collins. Ben Nelson might be movable, but it’s unlikely. You can call them, and your own Senators, toll-free at 888-254-5087.
Pat Garofalo has more on the policy substance here, noting that about 200,000 jobs could plausibly be lost as a result of the minority’s obstructionism here. And do note that if conditions do worsen many, many, many more Americans will blame Barack Obama for the bad state of things than will blame the Senate minority. The filibuster might not be so pernicious were its impact generally understood by the public, but the intersection of a minority that’s empowered to obstruct and an electorate that holds the majority responsible for policy outcomes is toxic.
Scott Lemieux at Lawyers, Guns and Money pivots off Yglesias:
The filibuster is indefensible for a whole host of reasons, but this dynamic seems especially difficult to justify. Democratic theory can offer justifications for any number of potentially counter-majoritarian veto points, but it’s hard to imagine circumstances in which it’s a good idea to empower a minority while practically leaving accountability with the majority. The fact that even a lot of progressives retain a sentimental attachment to the filibuster is as baffling as any reality of American politics. It can’t even really be nostalgia — for what, the filibuster of the Civil Rights Act? Even the Capra movie really isn’t that good…
Jonathan Chait at TNR:
I don’t think many Republicans are actually trying to stop legislation that might help the economy recover because they know that a slow economy is their best route to regaining power. I think that when they’re in power, consequences like an economic slowdown or a collapsing industry seem very dire, and policies to prevent this are going to sound compelling. When you’re out of power, arguments against such policies are going to sound more compelling.
I’m not excusing their behavior. You can resist that kind of mental trap — it just takes a lot of intellectual discipline and integrity. I don’t think you’re going to find a great deal of that sort of intellectual discipline and integrity among high-level politicians.
Evidently the Austerity Pimps are getting their way. It’s almost impossible to believe they are actually telling us with a straight face that with 10% unemployment, the unemployed are just lazy bastards who refuse to work, but that’s what they’re telling us. Ok. I won’t even get into the insanity of telling the states that they need to pull in their belts when their belts are wrapped around their necks and tightening.
UPDATE: Jay Heflin at The Hill