There are two Americas. In one America, working stiffs wonder whether it makes sense for the government to pay unemployment benefits for 99 weeks. In this America, folks have a lot of sympathy for those who are out of work through no fault of their own, but they also fear that when government writes unemployment checks for almost two years, that's an incentive not to get a job.
In another America, there is strong support for President Barack Obama's call for another extension of jobless benefits to 99 weeks. Like Obama, these Americans believe that unemployment benefits stimulate the economy. Some want to extend benefits further. Rep. Barbara Lee, D-Calif., has introduced a measure to add another 14 weeks on top of 99 weeks.
These two Americas are about to collide.
The president has called for another extension of benefits. He is expected to bring up the issue next week as part of his jobs package. Since 2009, Obama has been successful in pushing for a 99-week extension, which has been reauthorized five times -- most recently as part of the 2010 tax deal that extended all of the Bush tax cuts. But last month's debt ceiling package did not include an unemployment extension. The 99-week benefit is set to expire in January.
Now, with the August debt ceiling deal, at the very least, Republicans have to demand spending cuts to pay for the $56 billion tab for an extension. Moreover, they have to ask whether paying unemployment benefits for almost two years would be good for the U.S. economy.
Obama didn't help his cause when he picked Alan Krueger to chair his Council of Economic Advisers. Krueger, The Wall Street Journal editorialized, has written about unemployment insurance's tendency to extend how long recipients remain unemployed.
Labor economist James Sherk of the right-leaning Heritage Foundation argues that Congress should shorten unemployment benefits and pay for the rest of the freight with spending cuts. "You want more than six months" because it's a tough job market, Sherk told me. But after people have been out of work for two years, he noted, they are less attractive to employers.
Democrats counter that unemployment benefits stimulate the economy. In a statement in favor of her 113-week plan, Lee argued, "Not only do jobless workers need assistance for food and shelter month to month, but unemployed workers immediately spend the assistance they receive, which stimulates the economy."
"Jobless workers." That's a new one.
No surprise, there now are organizations for people who have exhausted all 99 weeks of unemployment benefits -- such as the American 99ers Union and Advocacy for the Long-Term Unemployed. I have a lot of sympathy for the unemployed, but when I read the 99er rhetoric in favor of the 113-week plan, I can't help but wish these folks would focus more on getting a job than turning unemployment into a career.
Another caveat: Because employers pay for unemployment benefits, extended benefits hinder job creation. "It's not like a flaming stake to the heart of the economy," Sherk observed, "but on the margins, higher (unemployment insurance) taxes discourage employers from hiring."
As Sherk noted, it's a tough job market out there; 44 percent of the unemployed have been out of work for more than six months. So the question is this: Is Washington doing these folks a favor by giving the jobless an incentive to remain "jobless workers"?
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