Extension of unemployment pay should be Congress' priority

Tuesday, July 13, 2010

Congress is back from its July 4 recess, and an estimated 2 million Americans have run out of unemployment benefits. The reason is that the Senate failed to agree, before leaving for the holiday, on renewing a program that provides extended jobless benefits -- for a total as long as 99 weeks -- during the economic downturn. Lawmakers of both parties say they want to restore the benefits but could not agree on whether the $35 billion cost should be financed by adding to the deficit or redirecting previously allocated -- although at this point unspecified -- stimulus funds. This is an unnecessary argument that is inflicting real damage on Americans who find themselves without work through no fault of their own.

Drawing the deficit line at additional unemployment benefits is shortsighted, because, if anything, the economy could benefit from more stimulus spending, not less. Unemployment benefits, which are most apt to be immediately plowed back into the economy, are about the most stimulative form of spending. Extending them is both fiscally sensible and morally decent.

In theory, longer periods for drawing benefits reduce recipients' incentives to find work. In the current reality, with jobs scarce and unemployment benefits hardly lavish, the program is probably not discouraging many people from accepting available work. Nearly half the unemployed have been out of work for six months or more, and one-fourth have been without work for a year. Unemployment benefits -- which average just over $300 a week -- are an essential lifeline. The Senate needs to extend them.

It should also offer more help to states to pay for Medicaid, the joint federal-state health care program for the poor. There is no good reason to oppose this help and every reason to offer it. The cost has been trimmed from $24 billion to $16 billion. It is fully paid for, as is the rest of the measure, which would extend expiring tax breaks and renew a particularly effective program to provide jobs to unemployed low-income parents.

States are staggering under the impact of the economic slump, with revenue down and demand for social services up. Some 30 states were counting on the Medicaid money to balance their budgets, as required by law. The other cuts they would be forced to make if the Medicaid funds are not forthcoming would further slow the economic recovery. Passing this package is the right thing to do, and fiscally prudent too.

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