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Neither side happy with jobs bill being pushed through Congress

By Perry Bacon Jr.
Washington Post Staff Writer
Wednesday, May 26, 2010; 9:42 AM

Some conservatives say people who are out of work shouldn't be able to collect jobless benefits for almost two years. Liberals, meanwhile, want Congress to pay for a New Deal-style program in which the federal government would send money to states and localities, which would then directly hire people.

Neither group will be completely happy with the jobs bill being pushed through Congress. The $192 billion "American Jobs and Closing Loopholes Act of 2010," which could be approved in the House as soon as Wednesday and later this week in the Senate, largely keeps in place the policies that Democrats have pushed over the past year to deal with the recession as unemployment remains at almost 10 percent.

Although Democrats have cast the bill as a major job creation provision, the bulk of the money goes to keeping current payment rates for doctors under Medicare ($65 billion), aid to states for Medicaid ($24 billion) and unemployment benefits ($47 billion). The bill continues the unprecedented expansion of benefits for people out of work that started under the Bush administration back in 2008 but has expanded vastly under President Obama.

People who are unemployed can now claim up to 99 weeks of unemployment benefits, a huge increase from the 26 weeks most people received before the extensions of the past two years. Under the bill being considered by the House, those benefits would be kept in place for the rest of the year, offering aid to more than 5 million people whose benefits would otherwise run out.

Conservatives, including some on Capitol Hill, have criticized these expansions of benefits, saying they encourage people to spend a longer time looking for a new job and therefore increase the unemployment rate.

"Economic studies consistently show that when workers collect longer UI benefits they also stay unemployed longer," said James Sherk, a fellow at the conservative Heritage Foundation. "This does not happen because unemployed workers are lazy, or want welfare handouts. It happens because unemployment insurance changes the jobs the unemployed look for.

"Most job losers would like to find work near where they currently live, and in their same industry or occupation," Sherk said. "Who wants to move away from friends or family, or take a pay cut in a field in which you have less skills? Unfortunately a lot of workers will have to do just that."

But Democrats argue that unemployment benefits not only help people out of work, but improve the broader economy. And they say the millions of people out of work and receiving benefits are facing a job market where applicants far outnumber job openings.

"Not only is unemployment insurance vital to the individual families whose lives have been turned upside down by tough economic times, it is an important tool for maintaining the aggregate demand our economy needs to establish a sustainable recovery," wrote Obama economic adviser Lawrence H. Summers in a recent piece in the Wall Street Journal defending the expanded benefits.

Although liberals both in and outside of Congress support the expanded unemployed benefits, for weeks they have also pressed for a $100 billion bill that would provide $23 billion for states to prevent teacher layoffs and more than $70 billion that localities and states could use over the next years to hire people directly for jobs. Rep. George Miller (D-Calif.) has estimated the provision, which he helped write, could save or create more than a million jobs.

"It's definitely a good bill," said Ross Eisenbrey, vice-president of the liberal Economic Policy Institute, of the legislation the House is considering. "But we should be doing twice as much as we are considering right now. We have to do more about high unemployment now."

But the bill has made little headway on Capitol Hill, as many more moderate Democrats are expressing concerns about the growth of the federal budget deficit. Democrats in the Senate this week have balked at a push by Sen. Tom Harkin (D-Iowa) to add the teacher funding to a bill that provides money to fight the wars in Iraq and Afghanistan, citing budget considerations.

And it's not clear that the $70 billion state and local provision could even be passed in the more liberal House.

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