After agreeing to at least debate the possibility of extending unemployment insurance for three more months, the Senate is apparently looking through the sofa cushions for a payfor to offset the $6.5 billion cost. Though this one-time cost represents a tiny fraction of annual federal spending (0.2%), some members are saying they won’t support it without an offset.
Most of us consider the WaPo editorial board to be pretty damn hawkish on fiscal matters, but yesterday the paper featured this editorial which not only argues for extending UI, but for putting the cost on the deficit as opposed to scrimping around for a payfor (my bold).
It may actually be efficient to help some workers stay unemployed a bit longer, until a job comes along that matches their skills, rather than force them to waste those skills on the first available position. We’re more skeptical of Democratic claims that extending unemployment benefits would stimulate recipients’ spending and thus boost economic growth. Any such Keynesian fillip is likely to be minuscule at best, just as the $6.5 billion increase in the budget deficit is too small to warrant GOP demands that extended benefits be offset by spending cuts elsewhere.
Especially given the time pressures and the fact that over 1 million people lost extended benefits at the end of last month (with millions more to come), not to mention that they’ve barely been able to hold on to the payfors they squeezed out for the Murray/Ryan budget deal, not to mention again that 0.2% point…I strongly agree.