Obama signs $18 billion jobless benefits bill

[frigidmagi]

AOL

By ANDREW TAYLOR

WASHINGTON -Just hours after Congress passed an $18 billion bill to restore unemployment benefits for the long-term unemployed, President Barack Obama made it the law of the land.
The measure comes as welcome relief to hundreds of thousands of people who lost out on the additional weeks of compensation after exhausting their state-paid benefits. They now will be able to reapply for long-term unemployment benefits and receive those checks retroactively under the legislation.
The bill also restores full Medicare payments to doctors who were threatened by a 21 percent cut and refloats the flood insurance program.
Obama signed the bill when he returned to the White House on Thursday night from fundraisers in Miami and a speech earlier in the day at Cape Canaveral, presidential spokesman Bill Burton said.
Obama thanked Congress for passing the temporary extension, saying it was critical to help struggling families make ends meet.
"Millions of Americans who lost their jobs in this economic crisis depend on unemployment and health insurance benefits to get by as they look for work and get themselves back on their feet," Obama said in a statement. "But as I requested in my budget, I urge Congress to move quickly to extend these benefits through the end of this year."
The legislation cleared both houses of Congress on Thursday night. The House passed the bill 289-112 just two hours after it emerged from the Senate on a 59-38 vote that capped an unusually partisan debate. Republicans largely chose to take a stand against the legislation for adding to the $12.8 trillion national despite backing it by wide margins in December and again recently.
"It increases the deficit by $18 billion, a cost to be paid for by future generations," said Rep. Jerry Moran, R-Kan. "This legislation is yet another unfortunate example of business as usual in our nation's capital."
Several other popular programs had also expired, including federal flood insurance, higher Medicare payment rates for doctors and generous health insurance subsidies for people who have lost their jobs.
The situation became more urgent Thursday afternoon when Medicare announced that it would start paying doctors' claims at a 21 percent lower rate. That won't be necessary now.
Thursday's measure provides up to 99 weekly unemployment checks averaging $335 to people whose 26 weeks of state-paid benefits have run out. It's a temporary extension through June 2 that gives House and Senate Democrats time to iron out a measure to fund the program through the end of the year.
Fewer than 1 in 3 House Republicans voted for the measure. Just three Senate Republicans did. The sole Democrat to oppose it was longtime budget hawk Rep. Jim Cooper of Tennessee.
The bill also extends a program created under last year's economic stimulus bill that gives unemployed people a 65 percent subsidy on health care premiums under the so-called COBRA program.
On successive votes earlier in the day, Democrats narrowly turned back two amendments by Sen. Tom Coburn, R-Okla., that would have paid for the measure over time by cutting spending and raising almost $10 billion in revenues with a variety of Democratic-backed ideas to tighten the tax code. One of Coburn's amendments was killed by a 50-48 vote.
The topic of providing additional weeks of jobless benefits in the midst of bad times had been regarded as routine. But with conservative voters and tea party activists up in arms about the deficit, conservative Senate Republicans upset about the deficit have twice caused interruptions of jobless benefits and other programs.
In February, Jim Bunning, R-Ky., single-handedly blocked an extension of unemployment benefits in an unsuccessful bid to force Democrats to pay for them. The measure passed on a 78-19 vote after Republicans were smacked by a public relations backlash.
But many Republicans believe it was a stand worth taking, including Coburn, who blocked a vote last month on another short-term extension.
By the time Senators returned from a two-week recess on Monday, only four Republicans — Susan Collins and Olympia Snowe of Maine, Scott Brown of Massachusetts and George Voinovich of Ohio — voted with Democrats to defeat a GOP filibuster of the bill. Only Voinovich, Collins and Snowe voted for the bill on Thursday.
Democrats said it was the wrong topic for Republicans to take a stand on the deficit after voting for tax cuts, wars and a new Medicare drug benefit without paying for them.
"They seem to have discovered fiscal responsibility when it comes time to extend unemployment benefits but not when it came to paying for tax cuts for the rich and the Iraq war," said Rep. Sander Levin, D-Mich.
Twenty-one Senate Republicans voted for the earlier extension last month and House GOP leaders opted against even forcing a vote. But Thursday's vote came after senators spent two weeks among their constituents — and as thousands of tea party activists came to Washington to protest on deadline day for filing taxes.
"I think people spent two weeks out listening to people about spending and debt," Coburn said.
The House has twice this year approved short-term extensions of jobless benefits and other expired programs.
The various programs in the longer-term legislation represent much of the Democrats' remaining agenda on job creation. One of the reasons the short-term legislation was needed is that House and Senate Democrats are having difficulty resolving their differences on how to pay for a package of expired tax breaks for individuals and businesses.
Other elements of the jobs agenda such as cash to build roads and schools and help local governments keep teachers on the payroll, remain on the shelf for a lack of money to pay for them.
Democrats said deficit-financed jobless benefits not only needed to help people unable to find work but that they are one of the most effective ways to pump up the still-struggling economy.

[The Minx]

The legislation cleared both houses of Congress on Thursday night. The House passed the bill 289-112 just two hours after it emerged from the Senate on a 59-38 vote that capped an unusually partisan debate. Republicans largely chose to take a stand against the legislation for adding to the $12.8 trillion national despite backing it by wide margins in December and again recently.

"It increases the deficit by $18 billion, a cost to be paid for by future generations," said Rep. Jerry Moran, R-Kan. "This legislation is yet another unfortunate example of business as usual in our nation's capital."

Tsk tsk. Complaining about "business as usual" after pulling crap like that.

[SirNitram]

Says a member of the party that passed the Medicare D giveaway to drug companies without funding it.... ANd of course, the WARS...

[The Cleric]

Says a member of the party that passed the Medicare D giveaway to drug companies without funding it.... ANd of course, the WARS...

Which are also wrong. Something about two of them not making a right?

[SirNitram]

Says a member of the party that passed the Medicare D giveaway to drug companies without funding it.... ANd of course, the WARS...

Which are also wrong. Something about two of them not making a right?

Something called blatant hypocrisy.

I support this bill(And hopefully extention to the year) is because I read, understand, and see the reality of Keyesnian economics.

[General Havoc]

Then perhaps Nitram, you could explain to me why it is a good idea.

I'm prepared to trust President Obama's judgment (as he's proven quite sound of mind in the past on these issues), but this is one of those issues in which I and the Democrats tend to disagree. Long-term joblessness is not something one solves by throwing money at it, and while the republicans are evil hypocrites, they are in fact correct that this is money that has to come from somewhere.

As I said, the President has (to this point) had sound judgment when it comes to these matters, so I will take his analysis of the situation for what it is worth, but I don't see how extending jobless benefits ad infinitum is a good idea, or a sustainable one.

So please, enlighten me.

[Derek Thunder]

As I said, the President has (to this point) had sound judgment when it comes to these matters, so I will take his analysis of the situation for what it is worth, but I don't see how extending jobless benefits ad infinitum is a good idea, or a sustainable one.

In a more immediate sense, it's because there are no jobs for these people to migrate to. Currently, the average is six applicants for every available job (before the 2008 recession and during the majority of the decade, the ratio was 2-1). Plus, for better or worse our economy is based on consumer spending, so removing all of that spending made possible by unemployment benefits will cause a drop in aggregate demand, requiring businesses to fire more people to stay profitable.

Unfortunately, there's a good chance that the jobs lost are gone for good, and ~10% unemployment will be the new norm - full employment frankly makes no sense when overseas labor is so cheap, and automation continues to make manual labor obsolete. We will have to figure out a way to address the reality that we no longer live in a society where someone who wants work can find it.

Edit - I forgot to add that employees pay into their unemployment insurance when they work, so it's not really an entitlement so much as a previously agreed-to contract with their employer and the state.

[SirNitram]

This is not ad infinium, nor trying to erase permenant joblessness... And nor should it be. This is to try and keep people from starving and living in the street while the economy recovers from bullfuckery.

Normal unemployment is limited in how long you can get it. This is a response to a long-term fester in the economy.

The money must come from somewhere, and that is true. But you don't acheive much of any impact of the federal debt or deficit by stopping this, much like how cutting foreign aid, or earmarks, would. Moving the defense budget down from asymtotic(I think that's the term. A line moving upwards gradually, turning into a curve straight up) towards a more sustainable one would be a very important thing, as it's the part of the budget that's ballooning massively.

[The Cleric]

Something called blatant hypocrisy.

I support this bill(And hopefully extention to the year) is because I read, understand, and see the reality of Keyesnian economics.

No argument about the hypocrisy. Still doesn't make it right.

The job I work is very profitable for me. I'm good at it, true, but I make stupid good money for it. My place of employment has not received a quality application for employment so far this year. It's halfway through April. While I'm sure many areas of the country are suffering more, I still see "now hiring" signs up with frequency.

[SirNitram]

I am aware some places are trying to hire. But the simple fact is there is not a seamless link of 'positions open' to 'people unemployed'. Job requirements, individual competencies, location, etc. So for now, we try and get by by extending a program that works. I don't know what you mean by 'makes it right'. Spending money you haven't specifically budgeted? Yea, less than ideal, but a perfectly balanced budget at all times never works; it's why businesses get loans and so forth.

If this IS the coming of permenant 10% unemployment, society will be getting a serious change. It's simply not going to hold if we try and keep it as it is. Trying to tackle that will be worse than unfunded programs with demonstratable good.

[General Havoc]

This is not the coming of permanent 10% unemployment. Every successive economic downturn that this country has ever had was accompanied by learned predictions that unemployment would be permanently set to a higher level, due to all manner of factors which were expected to persist forever without change. Economics is a living science, wherein the situation as of today is not merely "not usually" that of tomorrow, but categorically never. Job growth is not simply a matter of who can make the cheapest textiles. In fact on a macro-scale, it has very little to do with such things.

[Derek Thunder]

My place of employment has not received a quality application for employment so far this year.

A couple of questions - First, can you describe your company's recruitment/outreach programs? Do you participate in job fairs, or advertise open positions on Monster/Craigslist? Second, define "quality." Third, what sort of education is required for even entry-level positions? People with postgraduate degrees are not by-and-large hurting from this recession, but they do not represent a significant part of the population. Fourth, are these positions which have time/energy requirements that rule out having families? Finally, without getting e-stalkerish, can you speak generally to the region your company is based in?

But you don't acheive much of any impact of the federal debt or deficit by stopping this, much like how cutting foreign aid, or earmarks, would.

(link)Foreign Aid amounts to less than one percent of the US federal budget, approximately 20 billion dollars of overall spending in FY2008.

(link)Earmarks amounted to about one percent of the federal budget, or 29 billion dollars in FY2006.

[General Havoc]

I believe Nitram's point was precisely that cutting Foreign Aid and Earmarks would not represent a major change in the federal budget.

To which I reply, as always, that just because something is not a major change (relatively speaking) does not mean it is necessarily a good thing to do. Whether as 1 or 100% of the budget, several dozen billion dollars is still a fair amount of money, and the question of whether or not to proceed with the program (just like the question of whether to cut foreign aid or Earmarks) is not dependent on what other expenditures we make.

[The Cleric]

My place of employment has not received a quality application for employment so far this year.

A couple of questions - First, can you describe your company's recruitment/outreach programs? Do you participate in job fairs, or advertise open positions on Monster/Craigslist? Second, define "quality." Third, what sort of education is required for even entry-level positions? People with postgraduate degrees are not by-and-large hurting from this recession, but they do not represent a significant part of the population. Fourth, are these positions which have time/energy requirements that rule out having families? Finally, without getting e-stalkerish, can you speak generally to the region your company is based in?

I'm a Retail Sales Consultant for AT&T. I sling cell phones. I expect to make around $65k this year, pre tax of course.

You need a high school diploma and generally some sales experience. The ability to work 40 hours a week in 5x8 hour shifts, and the ability to work till 9pm and weekends. I live and work in central Maryland, which government proximity helps soften the blow of economic downturn. The area is moderately affluent.

[Derek Thunder]

I was actually bringing up those statistics to reiterate his point, as many people vastly overestimate how much of our budget those two things amount to. it wasn't a refutation, but on re-reading I could see how it might appear that way.

Edit:

To which I reply, as always, that just because something is not a major change (relatively speaking) does not mean it is necessarily a good thing to do. Whether as 1 or 100% of the budget, several dozen billion dollars is still a fair amount of money, and the question of whether or not to proceed with the program (just like the question of whether to cut foreign aid or Earmarks) is not dependent on what other expenditures we make.

It depends on whether the context of the conversation is efficacy or debt reduction. If one's sole complaint is that the government is spending too much, then I think it behooves that person to formulate deficit reduction strategies that are statistically significant.

[Derek Thunder]

Addressing the greater point made by General Havoc, I think that this recession represents a seismic shift in employment that isn't comparable to previous recessions, and it has to do with several factors.

First, 'recoveries' over the last decade have taken a very different shape than those in the past. Whereas the recessions of 82-83 and 90-91 were V-shaped, the recovery that followed the .com collapse was really more of a U-shaped recovery, at least in terms of employment. It took almost five years for employment to return to the level it was at in 2000, unprecedented since the Great Depression. "Jobless recoveries" have become the norm rather than the exception, and if it is true that collapses almost invariably occur every 7-10 years, then we may never actually reach full employment, because any small gains made in employment will be wiped out.

I think it also needs stating that our economy since the mid-1990s has been largely based on the accumulation of credit and debt, and having that credit replace gains in income. The recent collapse has really shaken the core of the economy and the relationship of Americans to credit - without it being readily available, people are spending less; in an economy where the lion's share of activity is consumer spending, this is death. In order for a real recovery to occur, consumers need more money to spend, but due to the downward pressure of health care costs and foreign competition, it's unlikely that this will occur.

Finally, the summer of 2008 provided a preview of what will occur if/when demand does start rising - increasing energy costs caused by us hitting limits of oil production will provide a further downward pressure on spending, increasing over time, which will supress any sustained recovery. The solution to this recession is growth, but growth may not be possible.

Job growth is not simply a matter of who can make the cheapest textiles.

I admit that I'm not an economist, but I imagine that the marginal cost of producing goods (labor) is a primary consideration of any business.

[General Havoc]

I'm sorry, but this is simply the same doomsaying that one hears after every successive economic downturn. The historical figures simply do not bear it out.

First, 'recoveries' over the last decade have taken a very different shape than those in the past. Whereas the recessions of 82-83 and 90-91 were V-shaped, the recovery that followed the .com collapse was really more of a U-shaped recovery, at least in terms of employment. It took almost five years for employment to return to the level it was at in 2000, unprecedented since the Great Depression. "Jobless recoveries" have become the norm rather than the exception, and if it is true that collapses almost invariably occur every 7-10 years, then we may never actually reach full employment, because any small gains made in employment will be wiped out.

When you speak of the U-shaped recovery after the 2000 recession, I would bear in mind that the nature of the recovery was not the only special circumstance in play there. The reason it took five years to return to 2000 levels of employment is because in 2000, right before the recession began, unemployment was at 4%, the lowest level it had been since 1969. If you discount the moments when we were at war, and had an active draft (which tends to suppress the unemployment rate), it was the lowest unemployment since 1929. Moreover the reason the recovery after the 2000 recession was called "jobless" is because not all that many jobs were lost during the recession that preceded it. Unemployment crested at 6.5%, barely more than the average over the last 40 years. Previous recessions, the V-shaped ones you spoke of, had spikes of unemployment that reached 8% (90-91), or even 11% (82-83). It's much easier to come down from those numbers than it is to push the rate from 5-6% down to 4 again, especially since 4% isn't usually achievable even in normal economic times.

I think it also needs stating that our economy since the mid-1990s has been largely based on the accumulation of credit and debt, and having that credit replace gains in income. The recent collapse has really shaken the core of the economy and the relationship of Americans to credit - without it being readily available, people are spending less; in an economy where the lion's share of activity is consumer spending, this is death. In order for a real recovery to occur, consumers need more money to spend, but due to the downward pressure of health care costs and foreign competition, it's unlikely that this will occur.

While the financial services sector was (and probably remains) bloated in our economy, and was a larger share of the economy as a whole than it had any right to be, it's a far cry from that to claim that the economy is entirely based on credit and debt, or even largely based around it. Insofar as credit is a fundamental facet of modern economics, yes, companies deal in such things, but the collapse of much of the financial services industry did not destroy the US economy. And while it's true that credit will no longer be as readily available as it previously was, the lesson we take from it is that it should not have been that available in the first place. The inevitable backslide of credit availability after something this traumatic froze up the credit markets for a while, but they are plainly thawing. In addition, while consumer spending is the cornerstone of our economy, it does not follow that a period of more reduced spending equates to economic death. The health care costs issue is being addressed at least to some degree, and foreign competition was not at the root of this economic meltdown, nor is it a major factor in preventing the recovery. Finally, consumer spending is already beginning to rise, and has been doing so for the last several months.

Finally, the summer of 2008 provided a preview of what will occur if/when demand does start rising - increasing energy costs caused by us hitting limits of oil production will provide a further downward pressure on spending, increasing over time, which will supress any sustained recovery. The solution to this recession is growth, but growth may not be possible.

This is pure speculation with no basis in fact whatsoever. Peak Oil has been expected daily for forty years, and the increased oil prices of the summer of 2008 did not touch off this economic fallout, nor did they meaningfully contribute to it, not by any analysis I have ever heard of. These same exact factors were in place in 2005-2008, when we had 5% unemployment, and healthy (indeed, as it turns out, unhealthy) economic growth. Meaning unless oil demand has doubled in the last twelve months, I do not see how energy prices are interfering with the pace of the recovery, nor how they are expected to do so in the immediate future. The problems of energy production are a long term challenge to the economy, not some magical guillotine that will spontaneously abort all growth, especially not since growth under the same energy market conditions we face now has been proven to be perfectly feasible.

I admit that I'm not an economist, but I imagine that the marginal cost of producing goods (labor) is a primary consideration of any business.

The marginal cost of producing goods is not the same thing as labor costs, in fact the two are barely related. The marginal cost is essentially the increase in costs one incurs to produce one more "item" relative to the current levels of production, and is a composite of everything from labor costs, to transportation, quality assurance, raw materials. Given that labor is usually regarded as a semi-variable cost (despite what doomsayers would have you think), it's one factor among many. The low cost of labor in China does, and will continue to, cause many companies to employ Chinese labor for many purposes. That is nothing new, and is certainly not the death knell of the US economy.

This was a major and traumatic recession. It will take time to recover from it. Some things will (hopefully) never be the same again. But to look at the peak of the economic downturn and declare that this is to be the permanent state of affairs is to ignore history and reality both. The economy is already beginning to show signs of recovery, but even if it were not, the fact that it has not bounced back within a year is not indicative of a new permanent reality of unemployment and economic stagnation.

During every period of economic turmoil, people point to the current sorry state and proclaim that this time we have broken the mold, that the bust is perpetual, we shall all be poor, and the world is ending. Such people have so far been wrong every time. The data does not back them up this time. What conclusion would you have me draw?

[Derek Thunder]

Previous recessions, the V-shaped ones you spoke of, had spikes of unemployment that reached 8% (90-91), or even 11% (82-83). It's much easier to come down from those numbers than it is to push the rate from 5-6% down to 4 again, especially since 4% isn't usually achievable even in normal economic times.

So do you then believe that this will be a V-shaped recession, given continued weakness in such places as real estate? I guess it also begs the question of what makes 6.5% unemployment so radically different than 8% unemployment that one would engender a quick recovery and the other would take so long to erase. I'm under the impression that 5% is full employment.

I forgot to mention previously that new home sales and home construction have continued to slide downward over the past year, apparently impervious to generous tax rebates.

With respect to consumer spending, there's no evidence to suggest that people are earning more, which puts the question of sustained recovery in doubt. Consider this report (link). The median wage earner is earning less today than they were in 1997, and the past 13 years have been almost entirely flat. If consumer spending is up, that may only mean that people are starting to use credit to supplement income (possibly requiring me to forfeit my point about availability of credit, but it could also be a question of magnitude) which again puts doubt on a sustained recovery - it may just be another credit bubble forming.

...I do not see how energy prices are interfering with the pace of the recovery, nor how they are expected to do so in the immediate future. The problems of energy production are a long term challenge to the economy, not some magical guillotine that will spontaneously abort all growth, especially not since growth under the same energy market conditions we face now has been proven to be perfectly feasible.

Even the US military (a rather conservative outfit not prone to doom-and-gloom panic) is starting to predict shortfalls in production of fuel that will lead to higher energy costs and political instability within the next two years (link). We haven't really began to address what we'll do if oil runs out, alternative energy is still not widely utilized, and the government continues to drag its heels on a carbon tax/trading system.

Edit: Might as well add this report (link) which predicts that even at a fairly respectable growth rate, unemployment won't return to the 5-6% region until just short of 2017. Given the fact that we seem to be experiencing some manner of recession at almost regular intervals, I don't think we're going to make it to 2017 without another bubble forming and subsequently bursting.

[Derek Thunder]

I should add that I don't relish the idea of zero growth or a continually weak economy - I have a lot of plans/goals that have had to take a backseat due to the downturn (some of a Darwinian nature), but I see the possibility that we could be looking at a 'lost decade' a la Japan, if not worse.

[General Havoc]

I didn't say that I thought it was going to be a quick recovery. Like yourself, I am not an economist and have not the proper metrics to make such predictions. I simply said that the notion that there will be no recovery, and that the current market conditions are how things will be into perpetuity, is not merely wrong, but is the exact same sort of "behold our sins" doomsaying that follows every economic jolt. The economy is not static, and the factors you addressed are not new. That there exist potential challenges in the future does not equate to "10% unemployment is the new norm." There is no evidence whatsoever to indicate that.