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Thursday, June 24, 2010

The Jobs and Unemployment Compensation Bill is Unlikely to Pass

When the initial stimulus package was put into place, we threw out a life rope that was too short to save everyone. Some people were able to get to it, and they were helped, but others were left treading water or, worse, sinking. So do we circle back and throw out more rope in order to save the people left out the first time around? Ezra Klein brings the bad, but not unexpected news [Update: scratch the word unlikely in the title, the bill failed.]:

The Senate unemployment bill founders: Before talking about what's happened to the Senate jobs bill, it's worth first talking about what's in the Senate jobs bill.
The biggest and most important item is the extension of unemployment insurance. ...Then there's the extension of the federal government's program to help states pay for Medicaid costs. During recessions, more people need Medicaid, which increases the program's cost, but state revenues drop, which reduces their ability to pay for the program. ...
The bill also has a raft of tax cuts and investments, including billions for the Small Business Administration to offer more loans to small businesses, bonds to fund infrastructure development, money to encourage private-sector R&D. and more. A full list of the bill's provisions, and its subsequent modifications, can be found here.
Those modification documents are important, because Democrats have made a lot of changes to the bill in response to Republican opposition. The total cost went from $200 billion to about $110 billion. The bill went from being deficit-funded -- which is what you want for stimulus -- to largely paid for, with only the $30 billion or so in unemployment benefits adding to the deficit. The $25 addition to unemployment checks was eliminated, and states now have to pay more for Medicaid, adding to their budget woes. The bill, in other words, has been made smaller and weaker. And that's despite 9.7 percent unemployment.

And still, it looks like Democrats might lose the vote today. And when I say "lose the vote," I don't mean that a majority of the Senate will vote against it. I mean that 58 senators, rather than 60, will support the legislation. All Republicans, and possibly Ben Nelson, appear to remain opposed. And why not? The less that Democrats appear to be doing on jobs -- and the fewer jobs that Democrats actually create -- the better Republicans will do in November. ...

Looks like the "you're on your ownership society" is on its way.

    Posted by on Thursday, June 24, 2010 at 02:34 PM in Economics, Fiscal Policy, Unemployment | Permalink  Comments (30)


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