Redstate...
We
Need Employment Benefits, Not
Another Permanent Welfare Program
Force Democrats to pay unemployment
reparations from their own coffers
Posted by Daniel Horowitz
Sunday,
December 4th
Here
we go again. After
a full year of grandstanding against
another extension of unemployment benefits, some Republicans are ready
to cave.
If
you ever wondered why it is so hard
to cut spending, and more importantly, to downsize government, look no
further
than the fight over extending unemployment benefits.
Despite
a year full of political
parlance concerning budget austerity, many have forgotten that we have
only cut
$6.67 billion from the FY 2011 $1.049 trillion discretionary budget
authority. Even
this miniscule cut might
be cancelled out by up to $11 billion in emergency disaster spending,
which is
not subject to the spending caps.
Moreover, after just one year of cuts,
discretionary spending will
steadily rise during each subsequent year, albeit at a slower rate than
originally
proposed by Obama.
But
there is a more salient
observation that must be publicized.
These miniscule cuts, including the faux
baseline cuts, are only applied
to 28% of the budget – the part that is funded through the
congressional appropriations
process. The other
parts of the budget
are virtually unscathed, even from baseline cuts.
To that end, even as we cut a few billion
from baseline discretionary spending, we will still add hundreds of
billions
more in mandatory spending for each subsequent year.
These
mandatory programs have created
such inveterate dependency constituencies that nobody wants to touch
them with
a ten-foot pole. Even
if we exclude
Social Security, Medicare, and veteran’s benefits, there are still
almost $800
billion in other mandatory programs, most of which is spent on welfare. This has become the
fastest growing part of
the budget, yet it will remain completely fortified from any budget
control
mechanisms.
The
Unemployment Insurance (UI)
program has been one of the biggest drivers of increased ‘other
mandatory
spending’. Over the
past two years, due
to unprecedented 99 weeks of unemployment benefits and bankrupt state
unemployment programs, the UI program has cost between $130-160 billion
per
year, rapidly becoming the fourth largest expenditure (behind Medicaid)
in the
budget.
Are
we prepared to eschew free-market
principles, and permanently enshrine UI as part of the entitlement
state?
Although
Congress has previously
extended benefits beyond the traditional 26 weeks during recessions,
this time
they are clearly attempting to establish unemployment as a permanent
entitlement program. The
73-week
extension of unemployment benefits helped balloon the cost of
unemployment
compensation to the extent that the employer payroll taxes are no
longer
sufficient to fund the benefits. Over
the past three years, the federal government has collected roughly $135
billion
in taxes, while paying out $416 billion in benefits.
Now
there is bipartisan agreement to
extend the 99-week handout, even though it is incontrovertibly clear
that it
has failed to “stimulate” job growth.
In
fact, it has helped stimulate exodus from the labor force and record
duration
of unemployment.
But
don’t worry; Republicans are
promising to pay for it with other spending offsets (over 10 years).
Unfortunately,
the problem with the
GOP plan is that they are agreeing to the premise that further
extension is
indeed a necessity, and not a drag on the economy.
Consequently, once the Democrats ineluctably
scuttle the idea of offset spending cuts, how will Republicans explain
that
they are opposing something they deemed inviolate?
They will lose the political fight because
the public will once again perceive that Republicans ultimately agree
with the
premises of the progressives, albeit less enthusiastically. As such, they will side
with the more
enthusiastic and professional supporters of government dependency.
Even
if Republicans miraculously
succeed in passing offsets, what will they do next year? Based upon past
experiences, temporary
extensions become impervious to relapse, due to the political climate. If we don’t terminate
extraneous long-term
unemployment insurance now, or seriously restructure the program, it
will become
another third-rail unfunded liability, along with the other big three
expenditures. It
will also stimulate and
perpetuate more unemployment.
Furthermore,
if we are granting
benefits over and beyond what was paid into the system by employers,
why not
extend unemployment benefits to the millions of college graduates who
cannot
enter the workforce due to Obama’s economy?
Where do we draw the line?
At
some point, we must ask ourselves do we believe in free-market
doctrine, which
suggests that extended UI hurts the economy, or the Keynesian
multiplier, which
suggests that UI helps the economy?
In
order to preclude the creation of a
fourth entitlement, Republicans should categorically oppose extension,
irrespective of supposed spending offsets.
They need to stand firm and reject the
compassionate conservatism of the
past.
Instead,
they should counter with
authentic employment benefits.
Employment benefits would include across the
board personal and
corporate income tax reductions, repeal of thousands of odious
regulations in
the federal register, welfare reform, a comprehensive energy production
program, and a cessation of job-killing, market-distorting subsidies. Such a program would
create new jobs, elevate
personal income, and lower the cost of living for consumers.
At
the very least, they should demand
passage of one of the GOP’s jobs bills (REINS Act, Keystone Pipeline
bill,
DeMint’s welfare reform, etc.) – a real stimulant of employment – as a
precondition to passing more unemployment stimulation (and stand by
that
demand).
It
might be politically tempting to
cede the field on this issue. But
if we
can’t prevent the creation of a new permanent entitlement, how and when
will we
ever cut a single existing mandatory program?
The road will never get easier if we are
unwilling to complete our
sentences and articulate free enterprise policies from a position of
strength. Does
anyone really believe
that a few billion in discretionary spending cuts will slow our
inexorable
march towards Greek-style destruction?
Read
this and other columns at
Redstate
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