Obama’s Jobless Benefits Artifice, and How to Counter It

by J. D. Foster

On the issue of jobless benefits, President Obama has gone on the attack. With troubles mounting as fast as his political dreams are fading, you can understand why Barack Obama would want to change subjects.

With a vote on a $33.9 billion extension of jobless benefits pending in the Senate, Obama’s attack is to charge Republicans with opposing the extension. Why would he do that, given that congressional Republicans have stated repeatedly that they support the extension? As John Boehner, the House Republican leader, stated, “The president knows that Republicans support extending unemployment insurance.”

Contrary to Obama’s misdirection, the policy beef here is not the extension of the benefits but whether the extension should add to the deficit. Obama and friends don’t mind adding to a budget deficit that has already hit $1.5 trillion, but Republicans and quite a few Democrats have decided that $1.5 trillion is probably too much, and any additional spending must be paid for with spending reductions elsewhere. Most families and businesses call that budgeting; in today’s Washington, that’s called heresy.

The president is intentionally distorting the Republicans’ position in part to shift the imagery to one of hurting families and away from ballooning deficits. But more importantly, he needs a fight on any good ground to take attention away from his other troubles. For example, every time the jobless benefits issue arises, it reminds us all of the utter failure of his $862 billion stimulus package. A faltering economy, exploding deficits, and a failed policy make a lousy political cocktail.

Democratic spinmeister Donna Brazile tried her take on the subject when she repeated the nonsensical refrain that extending jobless benefits helps stimulate the economy. Extending these benefits is defensible as a humanitarian measure, but, as mounting evidence attests, the only thing that deficit spending stimulates is the national debt. Keynesian deficit spending is fiscal alchemy, but instead of lead to gold, proponents try to turn debt into prosperity. Of course, it fails.

In fairness, some Republicans have done themselves no favors in this debate, as Brazile took delight in noting. A respected body of literature suggests that extending unemployment benefits perpetuates unemployment because workers protected by their government checks are less likely to seek work. This is no criticism of the virtue of the American worker, merely a statement of the obvious. However, with an unemployment rate bouncing near 10 percent, in large part due to Washington’s policy failings, citing cold economic analysis is no way to warm the cockles of the American voters’ hearts. This perspective harkens back to the recession of the elder Bush’s administration, which took a “let them eat cake” approach to rising unemployment. And we know how that turned out.

J. D. Foster is Norman B. Ture senior fellow in the economics of fiscal policy at the Heritage Foundation.