A debate on the Senate floor Monday over unemployment compensation crystallized, at least for a moment, the divide between the two parties in Washington.
Sen. Jon Kyl of Arizona, the Republican whip, argued that unemployment benefits dissuade people from job-hunting "because people are being paid even though they're not working."
Unemployment insurance "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Kyl said during debate over whether unemployment insurance and other benefits that expired amid GOP objections Sunday should be extended.
"I'm sure most of them would like work and probably have tried to seek it, but you can't argue that it's a job enhancer. If anything, as I said, it's a disincentive. And the same thing with the COBRA extension and the other extensions here," said Kyl.
Unemployment benefits are generally so small that much of it is often used to pay for COBRA health insurance, even when subsidized. The size of the benefits does not generally cover the cost of living and it would be hard to find a single person who would prefer unemployment to having a job so that they could get subsidized COBRA.
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Sen. Max Baucus (D-Mont.), about as far from a populist as can be found in the Democratic Party, appeared surprised at Kyl's claim.
"The Senator from Arizona argues that unemployment insurance is a disincentive to jobs. Nothing could be further from the truth. I don't know anybody who's out of work and is receiving some unemployment insurance believes that that payment is sufficient not to find a job. The payments are so much lower than any salary or wage would be, it's just ridiculous. I might add, there are five unemployed Americans today for every job opening in the economy," said Baucus, chairman of the Finance Committee. "People are looking for work. They're not unemployed because of choice."
He added that Kyl's economic argument was flawed, as well. Unemployment benefits do create jobs because the recipients cycle the money through the economy. He cited a Congressional Budget Office analysis that said the Gross Domestic Product grew $1.90 for every dollar the federal government paid out.
Baucus, ever the bipartisan, gave Kyl a chance to take his accusation back.
"I don't know if the senator really meant this, but he certainly strongly implied, in fact, I took him to mean that unemployment insurance is a disincentive for people to look for work," said Baucus.
Kyl asked to clarify. "My colleague quoted me correctly -- almost correctly," he said. "I said, it's not a job creator. If anything, it could be argued that it is a disincentive for work, because people are being paid even though they're not working. I certainly did not say, and would never imply, that the reason people don't have jobs is because they're not looking for them. Now, it is true that a lot of Americans have gotten so tired of looking for jobs or -- or believe that they're not gong to find them, that they have stopped looking."
Still, Kyl concluded by standing by his statement.
"What I said is true and if my colleague could find a source that says it's not true, then please show me. But providing unemployment benefits does not create jobs," he said, though Baucus had already directed him to the CBO analysis.
Kyl could also consult economist Dean Baker of the Center for Economic and Policy Research. "It puts money into people's pockets and they spend almost all of it. That creates jobs," he said.
Arthur Delaney contributed reporting