A new analysis finds that paying unemployment benefits doesn’t deter the jobless from still seeking work - throwing more fuel on the heated debate that has dominated Congress for much of the past several months.
Unemployment benefits have become the chief battleground in President Obama’s call to pass a new round of stimulus spending, which includes aid to state and local governments and lending assistance to small businesses.
Republicans have blocked extending benefits for those whose payments have run out, arguing Congress must find ways to offset the costs. Democrats have refused, saying unemployment is a temporary emergency that justifies additional debt, and they say Republicans themselves used to agree with that.
“The Republicans met that responsibility each time under President Bush when he asked to extend unemployment insurance — they ought to do it now. Let’s not play politics with this issue,” David Axelrod, Mr. Obama’s top political adviser, said Sunday on ABC’s “This Week” program.
Democrats are also seeking to take away other arguments against unemployment benefits, and just before the Independence Day holiday the majority staff on Congress’s Joint Economic Committee released a report finding that the benefits are so low they don’t dampen the incentive for the unemployed to look for jobs.
The report also cited past evidence that showed even when benefits run out, workers do not rush back into the work force, indicating that the benefits weren’t the cause of them remaining jobless.
“The evidence is clear these benefits do not inhibit job seekers from vigorously looking for or accepting work,” said Rep. Carolyn B. Maloney, New York Democrat and chairwman of the committee. “Not only that, but the money that unemployed workers receive is plowed right back into the economy and thus can stimulate the economy and help it grow.”
A spokeswoman for Rep. Kevin Brady, Texas Republican and Mrs. Maloney’s counterpart on the committee, didn’t return messages for comment but Republicans overall say they don’t object to unemployment benefits, but argue that economic times have changed and that the deficit must be heeded.
Republicans have proposed redirecting unspent funds from last year’s $862 billion stimulus act to pay for the extra spending.
“If the Democrats object to extending these programs using their own stimulus offset to pay for them, then they will be saying loudly and clearly that their commitment to deficit spending trumps their desire to help the unemployed,” said Senate Minority Leader Mitch McConnell, Kentucky Republican.
With the unemployment rate still near 10 percent, the administration is having a difficult time arguing the stimulus act succeeded.
Mr. Axelrod said given that, there is “not a great appetite” in Congress for more stimulus spending. But he said lawmakers can still work on some measures such as unemployment insurance and small business aid.
Just before leaving for their week-long Independence Day break the Senate failed once again to pass a bill including some of those items, falling one vote shy of overcoming a filibuster. Senate Democrats say they will try again, possibly later this week.
Unemployment benefits have been deemed one of the best stimulus investments possible. The Congressional Budget Office says for every dollar the government spends on unemployment benefits, it pumps as much as $1.90 into the economy.
Because those getting checks spend them almost immediately, CBO said it is “both timely and cost-effective in spurring economic activity and employment.”