Mark Zandi: Congress Should Quit Its Deficit Dithering Unless It Wants Another Recession
Mark Zandi, chief economist with Moody's Economy.com and a former adviser to Sen. John McCain (R-Ariz.), said Friday that Congress needs to hurry up and reauthorize expired jobless aid or risk derailing the nascent economic recovery.
"The odds that the economy will slip back into the recession are still well below even," Zandi said during a conference call with reporters. "But if Congress is unable to provide this help, those odds will rise and become uncomfortably high."
Extended unemployment benefits for the long-term unemployed lapsed at the beginning of June as a domestic aid bill containing the benefits stalled in the Senate. Since then, nearly 1.7 million people who've been out of work for longer than six months have missed benefit checks they would have received had they been laid off closer to the beginning of the recession. President Obama's stimulus bill and subsequent acts of Congress had given the unemployed up to 99 weeks of benefits in some states.
Without the extended benefits in place, the unemployed in most states are eligible for only 26 weeks of benefits. The average duration of unemployment is 35 weeks, according to the Labor Department's report on Friday.
The sticking point in Congress has been the deficit. Republicans in the Senate, joined by Nebraska Democrat Ben Nelson, filibustered the most recent attempt to pass a bill on Wednesday because an extension of the benefits through November is not "paid for" and would add $33 billion to the deficit. Zandi said the deficit dithering is just bad economics -- it's more important to get the benefits to the people, who will immediately spend the money and help the economy.
"Paying for it should not be a necessary condition for passing it," he said. "In my view, the risks are just too high."
Zandi said it would be a good idea for Congress to plan to offset the cost of benefits -- but not this year or the next year.
Sen. Debbie Stabenow (D-Mich.) has said she believes Republicans view cratering the economy not so much as a risk than as a way to discourage Democratic voters in November.
Historically, federally-funded unemployment benefits are always used in times of recession and have never been paid for. (Rep. Jim McDermott, D-Wash., said paying for extended benefits would set a precedent that would essentially undermine the New Deal.) And they've never been allowed to expire with a national unemployment rate above 7.2 percent.
Zandi also blasted the notion that extended unemployment benefits are worsening the economy by discouraging recipients from looking for work.
"For me, the most telling statistic with regard to this issue is that there are five unemployed workers for every one job opening," he said. "That is well above what one would see in a normal well-functioning labor market, when it's generally one for one."