Looking to Cut in All the Wrong Places

Kicking those who are down and out isn’t a very laudable government policy, but that’s what Congress just did to 1.3 million unemployed over the weekend.

On Saturday, 1.3 million unemployed Americans saw their federal unemployment benefits cut. These are individuals who were continuing to receive unemployment checks even after their state benefits had expired. Given the magnitude of job losses of the Great Recession, in 2008, Congress voted to extend the 26 weeks of state unemployment benefits to the unemployed. That legislation gave a much-needed economic lifeline to the millions thrown out of work through no fault of their own. The benefits helped the unemployed pay the rent, keep the lights on, and feed their families.

Now, Congress wants to cut that lifeline based on the theory that eliminating the benefits will give the long-term jobless extra incentive to look harder for work.

The flaw in that theory is that the unemployed have been looking for jobs, but the jobs are simply not there to be found. Pulling out the rug from under those who don’t have jobs doesn’t help the unemployed find work; it only increases their anxiety over how to find the means to survive from day to day.

Our representatives in Congress should understand the math: With 2.9 unemployed for every open job, there are not enough jobs to go around for all those who want them. It’s not an abundance of benefits that  keeps the jobless unemployed, but rather the lack of jobs. The only way these individuals have been receiving benefits is by continuing their search for employment. If the unemployed were lazy, they wouldn’t have been workers in the first place and eligible for benefits.

Now that the benefits are cut, the unemployed truly have less of an incentive to look for hard-to-find jobs. Instead of poring over job listings, the unemployed will be more tempted to fall back on the more costly safety net of welfare, public housing, Medicaid and food stamps. Of course, that will only push them deeper into the trench of poverty and dependency.

It’s not as though the unemployed are jetting off to Acapulco, chowing down on caviar or dining at five-star restaurants with their unemployment checks. In most states, the unemployment benefits are fairly minimal, usually not enough to even pay rent on a small apartment. In New York State, for example, unemployment checks max out at $405 a week. With the average rent in New York City at over $3,000 a month, the benefit won’t even cover the cost of a studio apartment in Manhattan.

Yes, the federal deficit is at an out-of-control $17 trillion, increasing by $2 billion a day, but the total cost of extending the benefits for the entire 2014, according to the Congressional Budget Office, would be $14 billion, less than .001 percent of the national debt or the cost of five B2 bombers, which also cost $135,000 an hour to run.

It’s not the unemployed who haven’t been doing their job since the Great Recession, but Congress. Congress has failed to provide the necessary incentive for businesses to grow ever since the recession hit. America’s infrastructure is fast becoming out-of-date and starting to crumble. Not only would investing in large-scale road, bridge and rail projects create construction jobs, but they would lower the costs for the transmission of goods, bringing back many of the manufacturing jobs lost to China and elsewhere. (A good infrastructure would lower shipping costs, taking away some of the incentive to outsource manufacturing to countries with lower labor costs.)

Congress and the president have failed in their job to get corporations, which are now sitting on a record $1trillion of hoarded cash, to make investments that will produce jobs. Corporations are unsure of the future because they still don’t know the impact of Obamacare on the economy; they are not certain of the direction of monetary policy; they are cautious of investing too much when 35 percent of their profits are taxed anyway; and they see weak demand for their products and services.

If there are any benefits Congress should cut, it’s those of corporations receiving corporate welfare and at the same time hoarding cash. Some of the “hard-luck” companies getting handouts on the taxpayers’ dime are Boeing, Xerox, IBM and General Electric. According to a report published in the Boston Globe, corporate welfare to such companies cost taxpayers $154 billion in 2013, a far cry from the $14 billion needed to keep unemployment benefits intact for the long-term unemployed. To those corporations that are getting corporate welfare and hoarding cash, Congress should make it clear that unless they start loosening the purse strings and start spending toward job creation, their benefits will be cut.

Congress should have the sense to restore these benefits immediately. If not, many of those who voted to heartlessly cut benefits may find themselves out of a job come next election.

This article appeared in print on page 10 of the December 30th, 2013 edition of Hamodia.