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Should lawmakers extend emergency benefits for long-term unemployed?

January 6, 2014 at 12:00 AM EDT
Emergency benefits for the long-term unemployed stopped for 1.3 million Americans at the end of December. Kwame Holman recaps the political debate over restarting those payments. Gwen Ifill gets perspectives from Secretary of Labor Thomas Perez and Douglas Holtz-Eakin of the American Action Forum on how to address unemployment.
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TRANSCRIPT

GWEN IFILL:  We return to the debate over extending unemployment insurance benefits.  The Senate was slated for a critical test vote late today, but that was just delayed until tomorrow morning. 

NewsHour congressional correspondent Kwame Holman starts us off. 

SEN. HARRY REID, Majority Leader:  I’m optimistic, cautiously optimistic, that the new year will bring a renewed spirit of cooperation to this chamber.  It’s really very badly needed. 

KWAME HOLMAN:  Senate Democratic Leader Harry Reid began 2014 with a push to restore emergency benefits for the long-term unemployed.  The payments ended for 1.3 million Americans on December 28, and the White House says 4.9 million others will lose benefits this year. 

SEN. HARRY REID:  We have never had so many unemployed for such a long period of time.  The long-term unemployment rate is twice as high as it was any other time we have allowed emergency unemployment benefits to end. 

KWAME HOLMAN:  The current program began under President George W. Bush in 2008.  It offers extended federal benefits after the expiration of state benefits.  On average, it means about $300 a week for someone out of work. 

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This new bill, sponsored by Democrat Jack Reed of Rhode Island and Republican Dean Heller of Nevada, would extend the federal program for another three months. 

President Obama’s chief economic adviser, Gene Sperling, spoke at the White House today.

GENE SPERLING, Director, White House National Economic Council:  The clear right thing for us to do right now is pass this measure now in its current form.  And, again, it’s just for three months.  It gives more time to have those type of, you know, further bipartisan discussions about what else you might do to extend it after that. 

KWAME HOLMAN:  But a number of Republicans, including Alabama’s Jeff Sessions, said the cost must be offset by spending cuts elsewhere in the federal budget. 

SEN. JEFF SESSIONS, R-Ala.:  This bill borrows every penny on it, just a total violation of promised fiscal responsibility.  It just is.  It just is.  I wish if weren’t so.  I wish we could just do this and it wouldn’t cost anything. 

KWAME HOLMAN:  The president means to step up the pressure on Congress tomorrow, when he hosts a White House event for people who’ve lost benefits. 

GWEN IFILL:  Now we look more closely at the broader political fight brewing this election year, first, the case made by the president’s team. 

Thomas Perez is the secretary of labor.  He joined us from the White House earlier this evening. 

Secretary Perez, thank you for joining us. 

THOMAS PEREZ, Secretary of Labor:  My pleasure. 

GWEN IFILL:  The unemployment insurance benefits have been extended now 11 times.  What do you think is the risk of not extending them again? 

THOMAS PEREZ:  Well, there are 1.3 million Americans who were supposed to receive their check today, but they didn’t, because the program has not been renewed. 

And so immediately they have gone from a situation of dire need to one of catastrophe.  And that’s not simply 1.3 million, but that’s also their family members.  And so that’s why it’s so important for Congress to act immediately to restore these programs. 

And I’m very heartened by the fact that there is a bipartisan bill in front of the Senate, with Senator Reid from Rhode Island and Senator Heller from Nevada, because this program has always enjoyed bipartisan support.  And I’m confident and hopeful that this time it will be no different. 

GWEN IFILL:  Except at last nose count, it didn’t look like the Democrats or Mr. Heller had the votes to get to that 60-vote threshold to consider debate.  Do you know differently? 

THOMAS PEREZ:  My role is not as the vote-counter here, but I can give you a sense of history, which is that Congress has always on a bipartisan basis supported emergency unemployment compensation. 

When President Bush was in office, five times, the bill was passed, no strings attached any of those times.  And so I’m confident and hopeful that this will pass.  And if it doesn’t, it not simply affects the 1.3 million people who no longer have their benefits and their families, but it also has a negative impact on the economy.  There have been a number of studies that have shown that somewhere between 200,000 and 300,000 jobs would be lost, because when people have less money in their pockets, they spend less.  Companies hire less because they’re selling less.  And the economy contracts. 

That’s an unnecessary situation.  It can be avoided.  And it can be avoided simply by extending emergency unemployment compensation for three months.  And hopefully during that time, a longer-term agreement can be worked out. 

GWEN IFILL:  Are you concerned that the continued need for a program like this might point to an underlying problem with the economy that perhaps is not being addressed? 

THOMAS PEREZ:  Well, this — extending unemployment insurance benefits on an emergency basis is certainly not the only strategy that we’re undertaking right now. 

We have seen 45 consecutive months of private sector job growth, to the tune of over eight million jobs.  But that’s not enough.  We need to pick up the pace of growth.  And the long-term unemployment rate right now is at a historic high.  That’s — one aspect of the recovery from the great recession is just that.  The average duration of unemployment in 2007 or 2008 when President Bush first signed the extension was 17 weeks. 

And the unemployment rate was something like 5.6 or 5.7 percent.  Now the average duration is 36 weeks.  And what we have to do in addition to extending emergency unemployment compensation is pass the president’s jobs agenda.  He’s put forth a very forward-leaning proposal to help us invest in our infrastructure, tax cuts for businesses that would enable one-time revenues that would allow us to expand infrastructure when we pass immigration reform.  That will grow the economy. 

The best way to address and attack the long-term unemployment problem is to grow the economy, to expand GDP.  And that’s what the president wants to do. 

 (CROSSTALK)

GWEN IFILL:  Pardon me for interrupting, but some Republicans who object to this particular proposal, this Dean Heller-Jack Reed proposal, are saying that they don’t object to the idea of expanding benefits or renewing benefits.  They object to the idea that we’re not paying for it.  Is that not a reasonable argument?

THOMAS PEREZ:  Well, certainly, when President Bush signed five extensions, there were no strings attached, when President Bush signed it.  I believe 14 out of the last 17 extensions of unemployment benefits have been signed with no strings attached. 

So, historically, there has been an understanding that we call it emergency unemployment compensation for a reason, because people are in a state of emergency.  And we’re talking about a bill here that is of a three-month duration.  And during that period of time, I’m hopeful that Congress can work together on a bipartisan fashion, once again, to come up with a longer-term fix. 

GWEN IFILL:  I heard you mention minimum wage and immigration, for instance.  I’m wondering if this is the beginning of a bigger fight on the administration’s part on these economic issues? 

THOMAS PEREZ:  Well, I think we have to do everything to put people back to work, to help people have those — that lifeline while they’re looking for work, and to make sure that work pays a decent wage.  Nobody should have to — nobody who works a full-time job should be living in poverty.  And there are so many people who are. 

And that is why the president and I and so many others on a bipartisan basis so strongly support an increase in the minimum wage.  But that’s not enough either.  We do so much at the Department of Labor, for instance, to invest in skills, so that people have the tools necessary to compete for today and tomorrow’s jobs and have those ladders of opportunity to the middle class. 

And these wide-ranging investments that the president has been putting forth are really a multifaceted strategy for growing the middle class, for insuring that we can lift people out of poverty, and giving that critical lifeline to those who are in a situation of long-term unemployment through no fault of their own. 

GWEN IFILL:  But is there any room at all for bipartisan agreement, as you keep alluding to, in an election year like this? 

THOMAS PEREZ:  Oh, I think so. 

I was working, Gwen, for Senator Kennedy in 1996.  People say that you can’t get anything passed in a presidential election year.  Well, you look back on that year, the minimum wage was increased.  There was a hate crimes bill passed.  Welfare reform passed.  Immigration reform passed.  There was a major health reform bill that passed, all in a presidential election year. 

So it can be done.  It has been done.  And I think right now, you look at the situation across America, too many people are working hard and falling further behind. 

GWEN IFILL:  Secretary of Labor Thomas Perez, thank you so much. 

THOMAS PEREZ:  Thank you. 

GWEN IFILL:  And now for an alternate view, we turn to Douglas Holtz-Eakin, former director of the Congressional Budget Office from 2003-2006.  He also was a top economic adviser to President George W. Bush.  He’s now the president of the American Action Forum, a conservative think tank. 

So the White House says that benefits need to be increased, that this emergency unemployment insurance needs to be extended.  What’s the argument against that? 

DOUGLAS HOLTZ-EAKIN, Former Congressional Budget Office Director:  Well, I think the first thing is to agree with the fact there’s a real problem, and that the best solution would be better strategies for more rapid economic growth and getting people jobs and increases in income. 

Patching things after the fact, which is all unemployment insurance really does, really doesn’t help.  And so that I think is the key, and the president should spend time on bipartisan approaches for better economic growth.  It would be, I think, a more fruitful path than to push on this. 

The second is to simply be clear about matching problems and solutions.  If the problem is someone can’t find a job because they don’t have the skills and they need some retraining, extending emergency unemployment isn’t going to solve that.  You need the job training programs or the skills bills that come out of the House and are sitting in the Senate. 

If you have a problem where you have just poverty, long-term insurance benefits for an emergency aren’t going to solve that either.  You have got to fix the social safety net.  Unemployment insurance was meant to be a bridge for temporary spells of unemployment.  And even there, it cuts both ways.  The good news is, people have some income.  They can take some time to find a job and have one that matches. 

The bad news is all the evidence is that the longer you have unemployment insurance, the longer people stay out of work, their skills erode.  The job they ultimately get pays less.  And that’s not to their benefit.  So the question becomes what is the right length of unemployment insurance?  And here’s the debate, 26 weeks, which is the safety net that will remain right now, vs. effectively 40 weeks, so six-and-a-half months to 10 months, which is what is at play in the Senate. 

And we don’t know the scientific answer to that. 

GWEN IFILL:  You put a lot of things out there. 

DOUGLAS HOLTZ-EAKIN:  Sure.

GWEN IFILL:  I just want to go one that you mentioned, which is that it is a patch, that it is a temporary patch. 

We just heard Secretary Perez say this is the kind of patch that was applied just fine in the Bush years without strings attached.  Is that not — is he incorrect about that? 

DOUGLAS HOLTZ-EAKIN:  It may have been, but I think we all know the budgetary environment we live in.  We all know the troubling future for federal deficits.  They should pay for everything.  This shouldn’t be special on this bill or another one.  The Congress has to get serious about controlling spending. 

GWEN IFILL:  What about the argument that is made, which is by putting more money in the pockets of people who need it, even if for a temporary period of time, you put more money in the economy?

DOUGLAS HOLTZ-EAKIN:  It’s right.  It’s just not that big.  If it was a huge impact, then the stimulus bill would have been an amazing success and we wouldn’t be having this conversation right now.  So, yes, true, but let’s get the magnitude straight.  This isn’t that big. 

GWEN IFILL:  Until you can figure out the longer-term fix, what’s wrong with this three-month, what is it, $6 billion fix which is being mentioned, $6.5 billion fix which is being debated right now on Capitol Hill? 

DOUGLAS HOLTZ-EAKIN:  Well, on a policy basis, the two questions are, one, are you going to pay for it or not?  I at least think you ought to pay for everything. 

GWEN IFILL:  Even if it is temporary?

DOUGLAS HOLTZ-EAKIN:  Absolutely.  There isn’t a good excuse for not paying attention to the fiscal outlook at this point.  Those days are gone. 

And the second one is, well, we want to have a bridge.  But we want to have a bridge that works to the effective help of workers, not harm them in the end, so what is the right length?  And you can make a principled argument for 40.  You can make a principled argument for 26, which is what we have if we don’t extend it. 

GWEN IFILL:  So what is the immediate solution or likely solution or possible solution that you would prefer for the long-term underlying problem of long-term unemployment?

DOUGLAS HOLTZ-EAKIN:  Well, there are things that, for example, the president has proposed and talked about, but has not put serious effort into.  I would say tax reform would be number one. 

A lot of agreement that our companies are not internationally competitive with the tax code, a lot of agreement that we would get a boost to short-term economic growth from tax reform.  Let’s put some effort into getting real tax reform moving through the Congress.  Former Senate Finance Chairman Max Baucus, now going to be the ambassador to China, spent a lot of time this.  Dave Camp spent a lot of time on this.

There is a bipartisan underpinning for it.  The White House needs to weigh in, in a serious way. 

GWEN IFILL:  I have to ask you the same question I asked Secretary Perez, which is this idea of grand bipartisanship which can be reached in a election year, how can that happen? 

DOUGLAS HOLTZ-EAKIN:  The only way you get bipartisanship is with great White House leadership.  Congress is fundamentally a partisan place and the White House has to broker those deals. 

GWEN IFILL:  Are we having — when it comes right down to it, especially when it comes to issues like unemployment, where you can — especially right after the holiday, are we having an economic argument here, or are we having an emotional one? 

DOUGLAS HOLTZ-EAKIN:  Oh, this is a great political argument and a very emotional one.

But I always think that, even though that’s true, it’s important to step back and look at the facts, figure out what is big, what is small, and always target the solution and the policy issue correctly.  Don’t try to solve the wrong problem with unemployment insurance. 

GWEN IFILL:  What is the wrong problem in this case? 

DOUGLAS HOLTZ-EAKIN:  Well, look, I think there’s a big problem with skills and that we do need better training programs, we do need a way to get people from careers that are dead-end into new careers. 

Unemployment insurance doesn’t do that. 

GWEN IFILL:  And what is the political problem? 

DOUGLAS HOLTZ-EAKIN:  The political problem here for the White House is they have a bad economic record.  They want to change the subject and start pointing fingers.  This is a good way to do it. 

GWEN IFILL:  OK.

Douglas Holtz-Eakin, thank you so much. 

DOUGLAS HOLTZ-EAKIN:  Thank you.