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The Boots of Poverty Are Strapless

If you follow Stanford grad Cory Booker on Twitter, you’ll be well aware that federal unemployment benefits have expired. The bulk of the program expired at the end of 2013, cutting off almost two million people from its support.

The current federal program was initiated by President Bush as an emergency response to the 2008 recession and its resulting unemployment. Since then, Congress has voted 11 times to continue it, never allowing one day with expired benefits.

What makes this time different?

The current debate is over a bill in the Senate proposed by Jack Reed (D-RI). The bill proposes to extend benefits for an additional three months. Like most welfare programs, unemployment insurance is typically administered by states, and most states have a limit of 26 weeks of benefits for an eligible individual. The three-month federal extension would support the 35.8 percent of unemployed individuals who did not find a job in the first 26 weeks of being laid off, at a total cost of $6.4 billion over ten years.

Yet, when the bill came up for a vote a third time in early February, Republicans filibustered. There was no vote to be had.

Originally, they said that the cost was too high. After an amendment was added that cut spending elsewhere (called a pay-for), Sen. Rob Portman (R-OH) commented that the pay-for “put taxpayers at risk,” despite that a similar pay-for has been used in past laws by both sides.

Other Republicans say that their voice is being ignored in the process – hardly a good reason to deny two million Americans sustenance – despite the fact that the bill was co-introduced by Sen. Dean Heller (R-NV). Likewise, Sen. Tom Coburn (R-OK) inserted a sensible amendment that denied benefits to millionaires.

Even if the one voted needed for passage in the Senate is secured, Speaker Boehner will likely table it as he has tabled immigration, putting it on ice for the foreseeable future.

However, denying people unemployment insurance is actually hurting the economy. Firstly, it pushes people from a time-limited program to other, indefinite ones, like Social Security and disability benefits, according to a Government Accountability Office report. This often means the involved individuals leave the economy, creating a false decrease in unemployment. The Economic Policy Institute estimates that 310,000 jobs will be lost in 2014 alone as a result of the expiration.

Secondly, the government is injecting less money into a still-struggling economy. The Washington Post reports that the expiring of benefits will cut between two-tenths and four-tenths of a percentage point from America’s GDP, or between roughly $30 and $60 billion (because those receiving benefits have very low saving rates). The money that they get is money they spend, injecting it back into the economy.

The same GAO report informs us that 40 percent of those who exhausted their benefits earned less than $20,000 in 2012.

Additionally, many conservatives lump unemployment insurance together with their understanding of the welfare state. They argue that these programs create a moral hazard – that is, they discourage unemployed individuals from finding a job.

This argument likewise does not hold water. State benefits run out after about six months. Federal benefits, if extended, will allow them to run out at nine months. Either way, there is a sunset on benefits. This pairs well with the fact that unemployed individuals find a job by month eight, on average.

Moreover, unemployment benefits do not incentivize individuals to lose their job. Indeed, only people who were let go through no fault of their own are eligible.

Lastly, most states’ unemployment insurance programs pay less than 50 percent of what someone was previously earning. Thus, some ask the question: Can you live on $330 per week?

It seems easy, but the weekly cost of attending Stanford is about six times that, at $1,840.

***

Republicans talk about the poor pulling themselves up by their bootstraps. This is certainly a lofty aim and one consistent with American individualism. But more often than not, boots don’t come with poverty, especially not boots with straps.

Cutting off unemployment insurance cuts the straps off two million more boots.

Congress should first pass this temporary extension.

Then they should focus on making federal benefits a more permanent institution. This policy is founded upon the principle that as a nation, we should agree to give a helping hand to those knocked down. This means that federal benefits should be extended at least two months. The system should be structured such that hardworking employed people – who therefore are paying into the insurance system – should, on average, not have to go one week without money for food.

It seems that enabling individuals to get back on their feet should be a policy that Republicans and Democrats alike would stand behind. There is more as a nation that we can do, but this is a good start.

Contact Nick Ahamed at [email protected]

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Nick Ahamed

Nick Ahamed

Nick Ahamed is the Desk Editor of The Stanford Daily Editorial Board. He was Managing Editor of Opinions for Volume 246 and previously served as a political columnist. He is a senior from Minneapolis, Minn. majoring in Political Science. Contact him at nahamed 'at' stanford.edu.