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Kyl: Unemployment Insurance A 'Necessary Evil'

First Posted: 07/12/10 05:51 PM ET Updated: 05/25/11 06:00 PM ET

Kyl

Senate Minority Whip Jon Kyl (R-Ariz.) said Monday that tax cuts for the wealthy shouldn't be offset by revenue increases elsewhere because their purpose is to shrink the size of government, fleshing out an argument he made on Sunday. The White House has seized on Kyl's assertion that unemployment benefits should be paid for but tax cuts shouldn't, hoping to portray the GOP as staunch defenders of the rich. But Kyl stood by his statement, calling jobless benefits a "necessary evil."

Viewing Kyl's argument through the prism of the deficit makes for a confusing philosophical landscape. But it's not about the deficit, it's about the size of government: Kyl and the GOP in general want to slash government spending -- on the domestic front, at least. Borrowing to pay for unemployment insurance cuts against that goal; borrowing to pay for tax cuts reduces revenues available to government and moves the nation closer to a crisis point at which cuts to social programs may become palatable. That strategy has long been known as "starve the beast."

"My view, and I think most of the people in my party, don't believe that you should ever have to offset a tax cut," said Kyl, speaking to reporters off the Senate floor. "The money belongs to the taxpayer, to the people. The money does not belong to the government. And yet that's what this kind of a rigid pay-go rule would assume, that the money belongs to the government and, therefore, if you're going to deny the government some of that revenue through a tax cut, you have to make the government whole because the government can never lose any money. That would mean that you could never reduce the size of government. Each year when it gets bigger, it stays at that level or gets bigger yet, but you can never reduce it. The money doesn't belong to the government. The money belongs to the people, so you shouldn't have to make the government whole every time you do something to reduce the revenue to the government."

Most economists, including Mark Zandi, a former adviser to Kyl's homestate GOP colleague John McCain, and the nonpartisan Congressional Budget Office, say that spending on unemployment insurance stimulates the economy because the jobless spend nearly the entire check. The wealthy, meanwhile, save most of the money they receive from tax cuts, spend it on luxury goods or send it offshore.

Kyl disagreed forcefully with that economic analysis and urged lower taxes and less regulation. "First of all, no economist will say that you should have to spend money on people who are unemployed because that stimulates the economy. If you didn't have high unemployment or a recession, nobody would be suggesting unemployment benefits. Stimulus, by just giving people money, is not the most efficient way to generate jobs and growth. The best way to generate growth in the economy -- jobs, income for governments who need to tax -- is by a growing economy. And there is no better way to stimulate a growing economy than through reforming tax and regulatory policy," he said.

Kyl said that the government would prefer not to have to pay unemployment benefits. "It's a necessary evil in a sense. You'd like not to have raise revenue in order to pay people for not working - or not to pay them for not working, but because they can't get work. You want them to get work so you don't have to pay them. It's something the government would just as soon not have to do if it could avoid it," he said. "To me, you shouldn't look at it as an economic matter. It's a humanitarian matter. You've got people who are out of work who can't find work, you want to help them out. Families need help. That's why you provide it. You don't do it because it's going to stimulate the economy."

In March, Kyl suggested on the Senate floor that unemployment benefits dissuade folks from seeking jobs. He was the first -- but far from the last -- member of Congress to make such an argument. At the time, an incredulous Max Baucus (D-Mont.) asked him if he wanted to soften the statement and he did. On Monday, HuffPost asked if he still felt that way. "Yes. Most economists do. Look at the textbooks written by economists who work for President Obama, Larry Summers for example," he said.

HuffPost noted that the research for those studies applies to good economic times, when a job seeker can juggle multiple offers, but not to recessionary periods, where jobs are harder to come by. Summers made the point recently in a letter to the Wall Street Journal.

"Oh, baloney. They don't qualify it in the textbooks," replied Kyl.

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