Key Democrats on Wednesday abandoned the latest pretense that they cared more about helping the jobless than they do about protecting tax breaks for Wall Street fund managers. Despite official jobless rates at nearly 10% -- and close to 40% if you count the under-employed in areas like Washington's impoverished Anacostia , a few miles from Capitol Hill, nearly a dozen Democratic Senators joined with Republicans to block an extension of unemployment benefits, aid to states and even job-creating tax breaks for businesses.
As the Washington Independent summed up:
The $140 billion measure looks increasingly unlikely to pass -- leaving thousands losing unemployment benefits every week -- due to intransigence from both Democrats and Republicans. Yesterday, Sen. Ben Nelson (D-Neb.) told reporters that he does not support the deficit spending. "Borrowing and deficit spending at the point of a crisis is one thing, but when you're in recovery, borrowing and deficit spending is another thing. Borrowing during a recovery is risky because it may slow down the recovery," he told The Hill. "If everything is an emergency then nothing is."
The upshot of the Senate's inaction is that 325,000 people have already lost benefits since the extension didn't pass by June 1, and by the end of the month, if Congress fails to act, about 1.25 million will be denied the unemployment assistance they're owed. As Andrew Stettner, the deputy director of the National Employment Law Project, told In These Times, "We're letting the economy go off a cliff." Unemployment assistance also boosts the economy by leading to direct spending.
UPDATE: A new bill is being prepared for a vote Friday that makes as much as $20 billion in additional cuts and drops an extra $25 in benefits, but whether that will be enough to secure support from moderate Democrats is still open to question.
Instead, Senators, including a few otherwise staunch liberals such as Wisconsin's Russ Feingold, are expressing greater concerns about the deficit, despite the view of most economists that short-term spending to help the jobless is more needed than sharp cuts in the deficit. Even Fed chairman Ben Bernanke and White House economists argue for a stimulus for workers and the economy, as an AP story points out:
Federal Reserve Chairman Ben Bernanke warned last week that while lawmakers need to come up with a plan for tackling the nation's long-term deficit crisis, the U.S. recovery is still fragile. It's too early for large, immediate spending cuts, Bernanke said.
"We've got to do more to build on the existing jobs momentum and that's what these targeted measures are about," said White House economist Jared Bernstein.
Instead, most Senators, progressives say, are being hypocritical about the deficit, because of their reluctance to close a loopholes that allows hedge and private equity fund managers have their earnings from deals taxed at 15%, a rate lower than the average autoworker's income tax. As Richard Trumka declared Wednesday:
Senators face a stark choice: Turn their backs on our fragile economic recovery just as it gains momentum, or finish the job they started a year and a half ago. Our communities are still struggling. Working men and women whose jobs have not returned are looking to their leaders for action. Almost half of those without jobs have been unemployed longer than 6 months, and extended unemployment and health care benefits have been keeping them and our economy afloat. The private sector is not yet creating the jobs we need. This is no time to let up or back off.
On the heels of a Wall Street-created economic disaster--the worst in generations--there is a telling absurdity to some members of Congress proposing to cut workers unemployment benefits by $25 a week while at the same time protecting wealthy investment managers from being taxed at the same rate as working people.
Indeed, as even the centrist New York Times notes, Senators fighting to defend billionaire fund investors at the expense of working families couldn't offer a more stark example of distorted, special-interest ruled politics:
Some senators, including Democrats, have balked at an unrelated provision that would begin to close a tax loophole enjoyed by some of the richest Americans. You heard right. Desperately needed unemployment benefits have been held hostage to a tax break for the rich, and the Senate's Democratic leadership has had to delay and finagle to get its own caucus in line.
State-provided unemployment benefits generally last for 26 weeks, and the federal government picks up the tab after that, provided Congress approves the extensions. There is no disagreement over the need: 46 percent of the nation's 15 million jobless workers have been unemployed for more than six months -- a higher level than at any time since the government began keeping track in 1948.
There is not even any genuine debate about how to pay for extended benefits. An extension through November would cost about $40 billion. But unemployment benefits are correctly considered emergency spending -- they are a vital safety net, and the money is crucial to supporting consumer demand in a weak economy -- and exempt from pay-as-you-go budget rules.
On top of that, a new right-wing meme is emerging this week in Congress: Unemployment is a lure for millions of lazy, drug-abusing unemployed workers who don't deserve a dime.
As the Campaign for America's Future Dave Johnson observes:
Do you remember last month when members of Congress said that people are unemployed because they are "lazy?"
Wasn't that insulting enough? Apparently members of Congress think it was not, and now want to insult the unemployed even more by adding a good, strong dose of humiliation to their lives.
As Digby wrote the other day after a previous episode of Democrats joining with Republicans to block help for the long-term unemployed, "This is simple cruelty at this point."
Not cruel enough, apparently. Sen. Hatch wants unemployed to face mandatory drug tests. What is Hatch's reasoning for a requirement that the unemployed publicly humiliate themselves?
"This amendment is a way to help people get off of drugs to become productive and healthy members of society, while ensuring that valuable taxpayer dollars aren't wasted."
Indeed, Democratic leaders and President Obama are buying into the view that the deficit is a more urgent need of resolving than spending on the jobless in any meaningful way (this Senate bill doesn't offer large-scale job creation or extend COBRA). So it's not surprising that bigotry against the unemployed is spreading in Washington along with an indifference to helping them.
This article originally appeared in the Working In These Times blog.
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