Obama Blames GOP for End of Unemployment Compensation

[Pangloss]

The president is blaming Republicans being blamed for the non-extension of unemployment compensation, but I think he's playing politics.

 

- Republicans aren't saying "no", they're saying "pay for it", as in fund it without adding to the debt.

 

- There's still unspent stimulus money. If unemployment compensation is stimulus as the administration claims, then why hasn't it proposed using that money to pay for the extension?

 

What do you think?

[Cap'n Refsmmat]

Isn't the unspent stimulus money allocated for a particular purpose already, even if not actually spent?

[Pangloss]

At any rate, just as the President knew would happen when he blasted Republicans yesterday, today the Senate swore in Robert Byrd's temporary replacement and immediately passed the unemployment extension, with funding to come from additional deficit expenditure.

 

http://www.nytimes.com/2010/07/21/us/politics/21jobs.html

 

One thing I'm not clear on is how long people on the dole have been collecting. The above article says it extends benefits past 26 weeks, but FNC has been hammering this "99 weeks being extended to 126 weeks" thing for a while. Just to add a third number, ABC News last night interviewed an unemployed lawyer who's been collecting for "about a year".

 

This goes to the larger subject of how much compensation is appropriate. 26 weeks doesn't seem like a lot, but 126 weeks seems like too much, at least to me. I don't know that I could put a specific number on it, and I'm a pretty flexible guy anyway, but it seems like something that ought to be established one way or another. Even Larry Summers (now Obama's chief economic advisor) has linked unemployment compensation to a failure in unemployment figures to drop (source).

[john5746]

Politics on both sides, but I would like to see the money come from funds already set aside. Of course, if Obama came up with the idea, there would be Republicans complaining that the stimulus money was being misused.

 

I still think the unemployment issue needs to be addressed in a different manner. It is obviously a more serious problem than in years past and just throwing money at it might not be the smartest approach. People should be compensated more for taking a lower paying job than for not working.

[swansont]

 

This goes to the larger subject of how much compensation is appropriate. 26 weeks doesn't seem like a lot, but 126 weeks seems like too much, at least to me. I don't know that I could put a specific number on it, and I'm a pretty flexible guy anyway, but it seems like something that ought to be established one way or another. Even Larry Summers (now Obama's chief economic advisor) has linked unemployment compensation to a failure in unemployment figures to drop (source).

 

No, I don't think that's what Summers is claiming, and the article also misrepresents it with a strawman and appeal to ridicule.

 

The reservation wage issue doesn't sound like it keeps unemployment numbers from dropping, it keeps the numbers of some people unemployed for a long time from dropping. The two aren't equivalent to each other, and the article is clear that the issue is "longer periods of joblessness" for select individuals.

 

Example: you have a lawyer who is out of work, and since his salary was $100k a year he's entitled to $2k a month (I'm completely making these numbers up) in unemployment, for an annual rate of $24k. S/he has no incentive to take a job that pays less than $24k a year ($12 an hour, assuming 40 hours a week). i.e. if a job flipping burgers for $8 an hour at McFatBurgers opens up, the answer will be, "No, thanks." However, it does NOT mean that nobody else will take that job. For somebody who was making half the unemployment rate, this job is above their reservation wage. There is no incentive for them not to take it. They are now employed, and the jobless rate goes down by whatever the quantum of unemployment is, even though the lawyer remains out of work.

 

From the article:

 

In other words, if government pays people for not working, then more people will work. Subsidize unemployment and you will somehow get less of it. But if this were true, we could lower unemployment even more if we increased jobless benefits to $100,000 a year per person to cause an even greater surge in demand.

 

This is classic strawman and appeal to ridicule. Increasing the duration of benefits is not the same as raising the rate of benefits.

[jackson33]

Under the 2009 Stimulus Bill, States were obligated to pay up to 50% of the extensions and would be if anything else came from that bill. These Stimulus/Jobs Bills, think the forth since the Stimulus are all Federal Money, not co pay from the States, unfunded and not falling under pay-go, because Congress has declared this emergency spending.

 

This bill, allows people on unemployment to collect up to 126 WEEKS, where the limit had been 99 weeks and it's retroactive, I'm not sure how far back. In simple terms, it's SAID 3 Million people will receive 300.00 per week, but their already talking about an additional Bill in November. Remember, when and there is no doubt when, when is, this money runs out EVERYBODY on unemployment over the normal States requirements, will no longer receive anything. Since nobody was allowed benefits past 99 weeks, and hitting that figure or close would be eligible for 27 additional weeks. If 3 Million that's about another 900M$ weekly benefit Federal expense, not including other benefits offered by the Federal and in some cases, the States.

 

 

 

From the Summers, which I'm argued out on. If a person can get the equivalent of 5-600 a week in cash/benefits for doing nothing or working under the table, they are not going to accepts a job that pays the same and in many cases, much more. That to me is an artificial economy by the Federal, and it cannot be sustained or maintained, not to mention the long range cost involved.

 

At least when Mr. Summers and the White House made this argument to justify their stimulus spending in 2008, and again in early 2009, the economy was headed toward or already in recession. Now the economy has been growing for nine months, and even the jobs market has begun to recover, but Mr. Summers is still preaching that government must spend more on transfer payments to create consumer demand. [/Quote]

[Pangloss]

No' date=' I don't think that's what Summers is claiming, and the article also misrepresents it with a strawman and appeal to ridicule.[/quote']

 

I don't think so -- the WSJ is hardly painting a clown's nose on his face, and he said what he said, even if what he said has additional options for interpretation. And either way it seems like he's being held back by the administration on this issue, not acting as the point man he would normally be due to his position.

 

I do agree with you that the WSJ editors are spinning his statements.

[JohnB]

Hmmm, we had similar problems a while ago. The number of unemployed "Brain surgeons" that could be found on a surfboard at Bondi beach was rediculous. We changed the law so that refusing a job, any job would get your unemployment benefit revoked. It is not the fault of the general populace that a lawyer cannot find a job as a lawyer and they should not be expected to pay for him to sit on his arse until his dream job opens up. He can take whatever work he can until he finds the job he wants.

 

Noting also that Universities teach what they want to and not what society might actually need, there will often be surplusses of certain professions. Just because a Uni produces 200 lawyers, doesn't mean that the economy actually has jobs for them. Tough on the students, but nobody said life was going to be fair.

 

The other thing that is going to come up now that benefits are being extended is the classic "Bait and Switch". "Long Term Unemployed" people look very bad on a governments report card, so in the spirit of "retraining" and "addressing the needs" of the job market here is what happens next. People on benefits for longer than time period "X" will be provided a training/retraining course (either free of charge or subsidised through private training orgs) to give them skills "suitable" for the "changed" job market. While on those courses the people will not be on "Unemployment Benefits" but will transfer to a "Training Allowance". Once the course is over they will revert to "Unemployment" benefits, but will not longer be part of the "Long Term Unemployed" group, they are now "Short Term Unemployed".

 

So the gov can show how "Long Term Unemployment" is dropping and they can point to the "Training Programs" providing a "Skilled Workforce" for "The Future". They can spend a sh*tload of cash and except for a few extra staff for training orgs not actually achieve one, single, worthwhile effect.

 

Isn't Democracy wonderful?

[Pangloss]

Well put and interesting.

[Skye]

Hmmm, we had similar problems a while ago. The number of unemployed "Brain surgeons" that could be found on a surfboard at Bondi beach was rediculous. We changed the law so that refusing a job, any job would get your unemployment benefit revoked. It is not the fault of the general populace that a lawyer cannot find a job as a lawyer and they should not be expected to pay for him to sit on his arse until his dream job opens up. He can take whatever work he can until he finds the job he wants.

Source?

 

This is a corner case anyway. The number of brain surgeons living in Bondi and collecting unemployment benefits would be statistically meaningless. It should also be noted that Australia is different in having a set unemployment allowance of around $250 a week as opposed to uneployment insurance that depends on previous income.

 

This does bring up an important point, that highly educated people in narrow fields often have high unemployment rates. There a misconception that being a brain surgeon (or whatever highly educated person) means that you should be able to find work fairly easily. In fact the converse is often true as people who have spent around 10 years in tertiary education often have limited unskilled work experience, or work experience at all. They are some of the least employable people of all in a general sense, outside of their very narrow specialisation. And narrow fields often have long periods without job vancancies so surprisingly high unemployment is often the result.

Noting also that Universities teach what they want to and not what society might actually need, there will often be surplusses of certain professions. Just because a Uni produces 200 lawyers, doesn't mean that the economy actually has jobs for them. Tough on the students, but nobody said life was going to be fair.

In the Australian context this is false on face value, and missing the real point anyway. The government subsidises a large part of most students tuition and does based on a number of places for each course that each university is entitled to. There is a minority of universities that don't get governments subsidies and there is a minority of places in other universities that aren't governments funded. However, mostly the government has ostensible control over what courses universities teach.

 

However the ostensible there is meaningful in that the government is limited by its own stupidity. Certain courses (such as business, some arts and law) are cheap to teach as they require little infrastucture or equipment beyond walls, floors and ceilings, while others (such as science, engineering and medicine) are more expensive as they require more infrastructure and equipment. Funding doesn't reflect costing accurately so, for example, a chemistry department I previously studied in made on a loss on teaching all subjects other than the first year ones. The underfunding of science, engineering, medicine, etc. places is made up for by the over-allocation of business, arts, law, etc. places to balance the books.

 

The other thing that is going to come up now that benefits are being extended is the classic "Bait and Switch". "Long Term Unemployed" people look very bad on a governments report card, so in the spirit of "retraining" and "addressing the needs" of the job market here is what happens next. People on benefits for longer than time period "X" will be provided a training/retraining course (either free of charge or subsidised through private training orgs) to give them skills "suitable" for the "changed" job market. While on those courses the people will not be on "Unemployment Benefits" but will transfer to a "Training Allowance". Once the course is over they will revert to "Unemployment" benefits, but will not longer be part of the "Long Term Unemployed" group, they are now "Short Term Unemployed".

 

So the gov can show how "Long Term Unemployment" is dropping and they can point to the "Training Programs" providing a "Skilled Workforce" for "The Future". They can spend a sh*tload of cash and except for a few extra staff for training orgs not actually achieve one, single, worthwhile effect.

Sure, if you've got stupid economists. Decent economists recognise study and training as an area of hidden unemployment, especially during recessions.

 

ETA: Sorry for the Australian derailment, but John started it.

Edited July 21, 2010 by Skye

[swansont]

I don't think so -- the WSJ is hardly painting a clown's nose on his face, and he said what he said, even if what he said has additional options for interpretation. And either way it seems like he's being held back by the administration on this issue, not acting as the point man he would normally be due to his position.

 

I do agree with you that the WSJ editors are spinning his statements.

Appeal to ridicule is not about calling someone a buffoon or portraying them as such. I's about distorting their position to make it sound ridiculous. The portrayal is a strawman (length of payment time vs rate of payment) and the amount is ~4x of the maximum of what people get from unemployment. Nobody is proposing that. The poverty threshold for a family of four is a little above $20k, which is comparable to the maximum unemployment compensation rate. IMO, $100k is a ridiculous number, used to drive home the idea that the distorted analysis is flawed.

[JohnB]

Skye, I was going back quite a while. I think it was Fraser who caused a ruckus by changing the dole rules. The point was that the surfers weren't surgeons, they were just happy to get money for nothing while waiting for the "surgeon" job to come up. Also, do you remember the screams some years ago when people were told their dole would be stopped if they moved to an area with already high unemployment? All those complaining because they couldn't move to Byron Bay and stil get the dole?

 

As to the bait and switch, Bob Hawke and Paul Keating pulled it off quite well. How else do you think those "Long Term Unemployed" figures came down in a recession? Back then I was one of those slobs going for "training" and it was a Public Servant at the CES office that explained it to me. Specifically that it's not intended to do anything except make the gov look good. In a time of high unemployment, when nobody is hiring office staff, what is the point of training people in basic computing and office skills? And this was before MS Office was in wide use!

 

No mate, "training" as practiced by the gov is a political ploy and nothing else. We would get a lot further giving the money to Universities to train the people we need.

 

As to who gets taught what, I wasn't piling it on the Unis, the Gov is mostly at fault. It takes neither great intelligence nor foresight to look at the figures and go "Hmmm, we have 25,000 lawyers, 5,000 of whom work at Mc Donalds, should we really be training 10,000 more?" Far better to shut down some law and Humanities faculties and give the money to the real sciences. (Bloody biased for someone without a degree, aren't I? )

 

It's like we had the big push for Uni education rather than Apprenticeships, and the TAFE Colleges were deemed "second best". Nice, now we have heaps of Engineers to design wonderful new buildings and plants, but very few to actually build the damn things. Sparkies are worth over $120k up north. Concreters and plasterers are booked solid for at least the next 4 years which isn't bad for a "downturned" economy.

 

Again, generally not the fault of the Unis, although I'll bet the Admins were very happy for the money with little outlay and so they didn't fight too hard. But a good example of very poor forward thinking on the part of Gov and their advisors. My job was Project Management, making sure the people, materials and skills all came together at the right time and in the right order. From all I have ever seen, these skills are sadly lacking in the Australian gov.

 

Anyway, I don't know if it's that much of a derail. While we aren't as partisan as the US, politics is politics where ever you go and tactics follow the same patterns. The US is looking at extending benefits, this is in response to people not being able to get jobs in the depressed market. Note that it also means that "Long Term Unemployment" is already a problem. Given the Democrat control of Congress and a Democrat President it is only logical for the Republicans to use this in a "Will ya lookee heah! These poor AMERICANS have bin out of work for years! For years I say! And what have the Democrats done? Nothin'! They don't even know how to fix the problem that's why they extended the benefits! A vote for the Democrats is a vote for another 4 years on benefits, and it saddens my heart to see my fellow AMERICANS driven so low, it truly does." kind of way. Of course the Republicans don't have the faintest idea what to do either, but it sure makes for good tub thumpin' come election time.

 

The only really viable response the Democrats have is to ramp up "training" so that people are "more prepared" for jobs when the Stimulus Package "kicks in" and the economy "rebounds". The training also has the effect of taking people off the "Long Term" list and moving them to the short term list. Add in a bit more about some package or other being "Investing in the Future of America" (or words to that effect) and it won't take long before the Democrats have their ads with some Joe Yokel saying: "Yes sir, I believe in America, I surely do. And since my retraining, I can not only flip the burgers at Mc Donalds, but I can fix the stove too. (I also studied Aeronautical Engineering so I could make better paper planes out of my Law degree, but that's another story.) Yes sir, I believe in America, I believe in the future and I believe in the Democrats!" *With a slow fade to medium close up still of Obama smiling and waving against a Stars and Stripes background.*

 

Oils ain't oils Sol, but politics is politics.

[Pangloss]

Appeal to ridicule is not about calling someone a buffoon or portraying them as such. I's about distorting their position to make it sound ridiculous.

 

THANK YOU! I've been telling a certain member of this forum that for months only to have the formal definition thrown in my face time and time again. Nice to have someone finally recognize this.