[xtypo_dropcap]U[/xtypo_dropcap]nemployment benefits are still on hold for 1.3 million of the nation’s 7 million jobless. Though legislators have pushed to extend benefits since early June, a third Republican filibuster late last week prevented Congress from passing legislation for more unemployment aid. The body is not in session this week.
Many conservatives argue that it is important to stop the $3.5 billion bill that would aid out of work people, in order to rein in the federal deficit.
“The economic logic behind this argument is that federal deficits will lead to future tax increases, which means members of Congress should rein in government spending. Of course, these same conservatives mostly had no problem supporting record budget deficits when they controlled Congress and George W. Bush was president,” wrote economist Heather Boushey in a recent statement titled Economic Mismanagement.
Boushey is a senior economist for the Center for American Progress, a self-described progressive organization often critical of policies that stem from conservative ideas. She said that opponents of extended benefits are risking a “double-dip recession.” Nobel Prize winner Paul Krugman has expressed the same concern.
“Government belt tightening when demand for goods and services in the economy is low will only pull our economy down an ugly path away from economic recovery,” wrote Boushey, who said that the government should hold off on tackling record federal deficits until the United States is clearly on the mend.
While there have been signs of economic recovery in the United States, few would argue that the economy has completely bounced back. Recent data from the Bureau of Labor Statistics reveal that over the past three months, the economy has added an average of 119,000 private-sector jobs per month. At the current rate, it will take over five years before the economy can recover the number of jobs lost in the recession (based on a deficit of 7.9 million jobs).
Many economists believe that the country’s debts are not merely due to the recent recession, but also to the economic policies of the Bush administration in which tax cuts for the wealthiest were enacted. The cuts were designed to encourage the wealthy to invest—a strategy intended to create sustained economic growth and higher employment.
“[But] that’s not what happened,” wrote Boushey.
Boushey said that the economic recovery from the last recession at the beginning of this century was the weakest recovery in the post-World War II era in terms of investment and employment growth, while the failures of conservative economics were directly responsible for the “U.S. housing and global financial crises and the Great Recession.”
“The conservative counterargument is not based on facts. It is an ideological argument: Rich people make the world go around and it doesn’t matter for our economy if 1 in 10 is out of work,” she wrote.
Boushey warned that leaving millions of long-term unemployed without benefits will drive down private sector hiring and drive up the deficit. She said that higher unemployment and no long-term benefits will undoubtedly lead to less consumer spending and fewer customers for local businesses. This in turn will lead to firms letting go of even more employees.
“It’s a vicious cycle downward,” she said.
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