Tuesday, December 7, 2010

Republican slams unemployed with voodoo economics

By DeWayne Wickham

Anyone who was watching when Rep. John Shadegg, R-Ariz., tried to explain why extending jobless benefits to unemployed workers shouldn’t be Congress’ top priority has a right to fear the Republican takeover of the House. His answer was pulled right out of the voodoo economics playbook.

Shortly before the Labor Department reported the nation’s unemployment rate rose from 9.6% in October to 9.8% in November, MSNBC commentator Mike Barnicle asked Shadegg, a leading member of the right-wing Republican Study Committee, if extending the unemployment payments that were about to expire would produce a more immediate benefit to the economy than extending a tax cut for the wealthiest Americans?

“It’s the creation of jobs that drives the economy” and it is the wealthy that create jobs, Shadegg snapped. If he’d stopped there Shadegg would have had at least one leg to stand on since an argument can be made in support of that position. But instead, the eight-term congressman pushed his argument beyond the limits of good sense.

“Actually,” he said, “the truth is the unemployed will spend as little of (their jobless checks) as they possibly can.” That’s right, Shadegg, who comes from a state that pays the second lowest unemployment benefits in the nation, said that. He thinks the nearly two million jobless Americans who will lose their unemployment benefits by Christmas if Congress doesn’t extend those payments are more likely to squirrel away that money than spend it.

I think that’s nonsense. Marc Morial thinks it’s “hocus pocus” economics. “The marginal propensity for the unemployed to spend their unemployment compensation is very high,” the National Urban League president told me. “It’s pre-K economics that people will spend unemployment compensation payments on the necessities of life.”

He’s right. An extension of unemployment benefits will give jobless people some badly needed survival funds. That spending will buttress consumer demand for those essential services. And that demand will give employers an immediate infusion of money that will help grow their businesses.

Obama wants to permanently extend the 2001 Bush-era tax cuts for families making less than $250,000 a year. Republicans want the tax cuts extended for everyone. To get that, GOP legislators are holding hostage Obama’s request for money to extend the unemployment benefits of people who have lost their jobs during this recession. While the two sides appear headed to a compromise that extends the jobless benefits and tax cut Republicans want, Shadegg’s disdain for the unemployed still makes me want to holler.

He justifies the Republican’s willingness to let the jobless benefits lapse with the nonsense he spouted. He apparently didn’t hear what the chief economist for Moody’s Analytics, the world’s leading provider of research and data to capital markets, told the U.S. Senate Finance Committee back in April.

“It is also important that policymakers provide emergency benefits to those who will lose their jobs this year. No form of the fiscal stimulus has proved more effective during the past two years than emergency (unemployment insurance) benefits,” Mark Zandi said. “This economic boost is large because financially stressed unemployed workers spend benefits quickly, as opposed to saving them.”

But, of course, that’s a no-brainer to just about everyone but Shadegg and his Republican colleagues who are playing political games with the lives of millions of unemployed Americans — and using voodoo economics to justify their callousness.

1 comment:

Tia's Blog Space said...

I know this response is late but I felt compelled to comment on this entry. I'm a graduate of Delaware State University c/o 2007 and I'm currently unemployed. I've never experienced such a hardship in finding employment before in my life. It is frustrating that I'm a recipient of a Bachelor's degree and now working on a Master's degree yet it has become more difficult with employers stating either I have too much experience or too little experience, or too much education or not enough education for the job I'm applying for. I currently receive unemployment and government assistance, people who are unemployed don't frivolously spend our money, some of us have more bills than the $400 or more we receive in benefits. Some politicians believe they know everything about unemployed Americans, but they don't know the half of what we're going through.