Conservatives steadfast against unemployment benefit boost

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Conservative economists are taking a firm stand against the renewal of additional federal jobless aid, even as millions approach the loss of benefits and the economy faces the risk of a new COVID-19 surge.

Instead, they say, jobs are rapidly returning and state benefits will still provide a safety net.

Almost 14 million people will lose their federal unemployment benefits at the end of the year after two key jobless programs from the $1.7 trillion CARES Act expire on Dec. 31, according to the latest Labor Department data. Democrats and Republicans are still far apart on another coronavirus stimulus package, which could renew the jobless aid programs. Including state unemployment aid, over 21 million people are currently receiving jobless benefits.

Tens of millions are struggling to pay bills, and half of all adults who say they were laid off because of the coronavirus pandemic were unemployed as of September. Furthermore, without additional unemployment relief from the federal government, most unemployed workers are drawing down their savings, which are likely to be exhausted in the coming weeks.

Conservative economists told the Washington Examiner that federal aid was no longer needed given that many jobs have returned and state unemployment programs will continue to relieve jobless workers.

“We need to keep doing what we’re doing. We have 6.9% unemployment, so it’s working,” said Stephen Moore, one of President Trump’s top outside economic advisers. “We’re going through the swiftest economic recovery in U.S. history.”

“For those still unemployed, they can use the normal state unemployment system, that’s why we have it. To give people help temporarily to get back on their feet,” said Moore, who is also a contributor to the Washington Examiner.

Liberal economists acknowledge the rapid pace of the jobs recovery and recognize it is likely to continue regardless of whether the federal unemployment aid is extended.

Instead, they say that the added benefits are needed to protect people at the margins of the workforce. “The economy overall will still keep growing regardless, it’s more a question of distribution and who feels the pain if we don’t have more aid,” said Ernie Tedeschi, an economist with macroeconomic advisory firm Evercore ISI who was a senior economist at the Treasury Department during the Obama administration.

The economy created 638,000 jobs in October. At this pace, it will take over 15 months to return to employment levels that were seen before the coronavirus came ashore.

Tedeschi added that families who stop receiving federal unemployment benefits after December would be “devastated,” both economically and epidemiologically, because the coronavirus pandemic is expected to get worse in the winter months.

Republicans in Congress have generally subscribed to the argument advanced by conservatives that extra jobless benefits prevent many workers from returning to their jobs because they earn more from collecting unemployment than they do from working.

However, studies from the past few months have indicated that the overwhelming driver for people not working during the pandemic isn’t increased unemployment benefits but rather the lack of jobs available.

Some conservative economists say that the economy is doing far better than was expected even just a few months ago, when they favored extending the pandemic boost to unemployment benefits at a lower rate than the $600-a-week rate set by the CARES Act. Now, they say the country is in a “recession” instead of a “depression.” Therefore, state unemployment programs that have existed for decades can provide the necessary relief to those without jobs, they argue, instead of the “emergency” unemployment programs created at the beginning of the pandemic. Furthermore, they say, each state now has its own unique economic and health concerns to address, and those particular circumstances cannot be addressed by a broad federal unemployment program.

“State and local policymakers should find the resources and decide what kind of unemployment benefits their people should get,” said Rachel Greszler, a senior policy analyst at the conservative Heritage Foundation.

She said that each state has the financial resources, through their own budgets or through the $500 billion in pandemic loans the Federal Reserve has offered states and municipalities, to provide more unemployment aid to residents.

However, liberal economists say that many states are facing even greater debt problems than the federal government and that loans from the Federal Reserve are not a sustainable way to help themselves. Without help from the federal government, states will be likely forced to reduce jobless aid and other critical services, or increase revenues through tax hikes, according to a June report by the Center on Budget and Policy Priorities, a left-leaning think tank. Such actions are likely to slow a state’s economic recovery from the pandemic.

Greszler also said the United States has faced multiple economic downturns in the past and that there has never been a way for the federal government, historically, to eliminate all the financial anxiety faced by those without jobs.

“Unemployment and the potential of suffering is not new, and the goal has always been to minimize people’s pain. You can’t eliminate it altogether,” said Greszler.

Casey Mulligan, a former chief economist at the White House Council of Economic Advisers under Trump, said that the federal boost to unemployment benefits is not needed because recipients’ employment problems are not coronavirus-related.

Most of the 9.5 million people receiving the Pandemic Unemployment Assistance, meant for self-employed and part-time workers, had employment struggles before the pandemic, according to Mulligan. Therefore, he said, the current jobless aid from the federal government is merely a “bonus.”

“It’s totally normal to have people who don’t have full work histories or who are not looking for jobs to not receive unemployment aid,” said Mulligan.

“Traditionally, the aid has been for people who had full-time jobs to help them out temporarily as they look for their next gig,” he said.





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