Friday, July 16, 2010

The GOP and Unemployment

Chances are, you wouldn’t be reading this blog if you didn’t make at least some attempt to keep up with the news. It’s likely, then, that you’ve already heard, or at least heard about, Senator Jon Kyl’s latest attempt to wrest the coveted title of Arizona Wackadoodle of the Year from the stiff competition presented by Jan Brewer. I’m talking, of course, about that moment when Chris Wallace of Fox News Sunday lapsed briefly into journalistic mode and actually asked a tough question of a Republican.

Noting the Republican opposition to expending unemployment coverage to millions of Americans currently out of work is grounded in a pious concern for deficit reduction, that increased expenditures must be counter-acted by concomitant cuts elsewhere, Wallace wanted to know what was going to be cut in order to accommodate the extension of the Bush tax cuts for the wealthiest Americans. We’ll forgo the enumeration of the obvious evasions and outright misrepresentation in Kyl’s response, and concentrate on a single sequence near the end of the interview (it starts at about the 6:23 marker on the linked video):
Wallace: How are you going to pay the $678 billion just on the tax cuts for people… making more than $200,000 a year?

Kyl: You should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right… if you decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the costs of increased spending, and that’s what Republicans object to, but you should never have to offset the costs of a deliberate decision to reduce tax rates on Americans.
Really. He said that. You see, reducing taxes on rich people without either cutting spending or finding alternative sources of income doesn’t add to the deficit. Providing a little more safety net to people thrown out of work by a recession caused largely if not exclusively by those same fat-cats whose tax breaks Kyl is defending: that increases the deficit, and therefore cannot be allowed. I should also note here that pre-emptive wars in West Asia and preventing the government from making the people responsible for the worst single man-made ecological disaster of all time pay the full cost of cleaning up their mess (the part you can put a price-tag on, at least): no effect on the deficit whatsoever. These statements are true in the parallel universe in which up is down, black is white, and Jon Kyl has an IQ above room temperature. In Celsius.

Kyl’s inanity was, if nothing else, good business for left-leaning bloggers and commentators. Rachel Maddow’s evisceration of Kyl’s argument may be taken as exemplary. Maddow pointed out that the deficit is indeed a function both of money coming into the system and money going out. I’m not sure her gin-and-tonic (without the gin part) metaphor was as effective as it was snarky, but her analysis is cogent and persuasive.

But there are still some things unsaid. First is the unchallenged assertion that tax cuts for the wealthy in fact “spur the economy.” This has been Republican gospel since the Reagan administration, which, of course, doesn’t come close to making it true. An article by John Tamny on—hardly a socialist bastion!—points out that “the top income tax rate was 91% in the 1950s, but the S&P 500 rose 245%. On the other hand, the combined federal tax on income and investment during the presidency of George W. Bush was lower than at any time post-World War II. Despite the relatively low tax burden, the S&P fell 36% on Bush's watch.” Wow, how bad must the rest of Bush's economic policy have been if all those “stimulative” tax cuts produced those results?!?

Indeed, there are those who argue that the effect of such cuts is so stimulative that revenues actually increase. While this theory isn’t quite as preposterous as it might seem on its face, it’s still kind of a reach: the logical extension of this line of reasoning, after all, is to say that the way to maximize government revenue is to eliminate taxes altogether. More to the point, recent history simply puts the lie to this canard: Reagan cuts taxes, revenue plummets; Clinton introduces targeted tax increases, revenue increases; Bush II cuts taxes, revenue sinks like a stone.

Here's a graph based on Congressional Budget Office numbers, demonstrating this fact. (I pulled this from a web post entitled "Do Tax Cuts Increase Revenue" by Robert Ricketts, who holds an endowed chair in taxation at the Rawls College of Business at Texas Tech University.) It is worth noting here that this chart shows both income and outlay numbers as a percentage of GDP, not in dollars per se. This formulation makes sense to me; more importantly, it obviously makes sense to someone with a lot better credentials in this area than either my own or (I strongly suspect) those of the overwhelming majority of people likely to be reading this essay.

Moreover, helping the wealthy in particular is as macroeconomically problematic as it is ethically bankrupt. In an ideal world in which rich people see themselves as part of a larger society, perhaps, the whole “trickle down” concept might work. Might I humbly suggest, however, that fundamental amorality and the sense of entitlement evinced by the good folks at Goldman Sachs or BP doesn't suggest that they're much interested in anyone but themselves? Use their extra liquidity to help the economy? Why would they want to do that when there's an offshore account with their name on it?

In contrast, the further down the economic ladder one finds oneself, the more likely one is to want to spend rather than save the extra cash a tax cut might precipitate. And while Republicans would have us believe that jobs are created by the sainted owners of Small Business, Inc., the fact of the matter is that demand for goods and services really drives the economy. If everyday people want to buy more widgets and have the wherewithal to do so, that creates jobs: for the widget-makers, the construction workers who expand the plant, the truckers who schlep the widgets from the factory to the store, the gas station operators who supply the fuel for those trucks, and on and on. Saving, though often an admirable thing to do, doesn't do that.

We might also note this graph, showing that since the Johnson administration, every Democratic president has increased revenue more than spending, and every Republican president has increased spending more than revenue. Thus, debt as a percentage of GDP declined fairly steadily after World War II... until it spiked under Presidents Reagan and Bush I. It then fell again during the Clinton administration, only to start climbing again during Bush II. So all this concern for the deficit is, to be kind, rather a new-found creed for Republicans.

But, really, this blog isn't about Republican hypocrisy on the deficit. That point has been made repeatedly by many people with far better economic credentials than mine. Curiously, neither the Corporate Media nor even the Democratic Party seems particularly interested in disseminating this data, but it's readily available. What I want to discuss is a different kind of radical inconsistency in Republican rhetoric. I hasten to note that some of the opinions expressed below are espoused by only a handful of Republicans, but 1). they're either former leaders of the party, elected officials, or the party nominee for significant state or federal office and 2). their positions have not—as far as I have been able to determine, at least—been repudiated by party leaders in either sense of that term (i.e., by Michael Steele on the one hand, or John Boehner, Mitch McConnell, et al., on the other).

I refer here to the practice of demonizing the unemployed. The most recent round of this process can probably be traced to this February, with Senator Jim Bunning's absurd but effective one-man crusade against extending unemployment benefits. To be fair, Bunning's opposition was at least initially advanced on prodecural grounds: that such a bill shouldn't have been presented for unanimous consent. To say that I don't understand the arcane rules whereby a single Senator (other than the majority leader, perhaps) can hold up important legislation is to err on the side of understatement. But it's equally true that I fail to comprehend how the Democratic leadership lacks the political will and/or parliamentary expertise to circumvent the obstructionist tactics of a single crackpot.

Anyway, while as far as I can determine Bunning made no assertion that the unemployed deserve what they get, his defenders did. Our friend Jon Kyl suggested on the Senate floor in early March, for example, that “continuing to pay people unemployment compensation is a disincentive for them to seek new work.” He does immediately claim that “I'm sure most of them would like work, and probably have tried to seek it.” A couple days later, former House Majority Leader Tom DeLay included no such qualifiers. Here's part of his exchange with CNN's Candy Crowley on State of the Union.
CROWLEY: ...people are unemployed because they want to be?

DELAY: Well, it is the truth. And people in the real world know it.
Most recently, Tom Corbett, the Republican nominee for governor of Pennsylvania, told radio reporter Scott Detrow that “The jobs are there. But if we keep extending unemployment, people are going to sit there and—I’ve literally had construction companies tell me, I can’t get people to come back to work until… they say, I’ll come back to work when unemployment runs out.”

And then, of course, there's Sharron Angle, who is running against Senate Majority Leader Harry Reid. Here's my personal favorite sequence from her interview with John Ralston of Face to Face:
RALSTON: You think that a bunch of people are sitting out there saying, “You know what, this is great! I got my unemployment check coming in, I'm not going to go out and look for a job?”

ANGLE: No, they're not.

RALSTON: But that's what you're implying.

ANGLE: It's not what I'm implying. What I'm implying is that there are some jobs out there that are available. Because they have to enter at a lower grade and they cannot keep their unemployment they have to make a choice. We're making them make a choice between unemployment benefits and going back to work and working up through the ranks of that job and actually building up a good wage again and building up some seniority in that job. And what we need to do is make that unemployment benefit go down, not just completely remove the safety net from them while they go out and look for a job.

RALSTON: So you're saying if people lose their jobs through no fault of their own, as many have during this recession, Sharron Angle's solution is to cut their unemployment benefits so low so they're somehow gonna go out and find jobs that don't exist? How does that make any sense?

ANGLE: There are jobs that do exist. That's what we're saying, is that there are jobs. But those are entry-level jobs.
First off, of course, unemployment benefits are already indeed only a percentage—usually about half—of what a worker could make at a job in his or her trade. So Angle really has no idea what she's talking about. Moreover, her solution to the problem is to take that unemployed accountant or dental hygienist or machinist and make 'em work at Mickey D's. If they apply themselves, they might make assistant manager in only a few months.

By now, you'll have spotted a trend. In what is becoming, apparently, mainstream Republican thinking, the real reason we shouldn't extend unemployment benefits isn't really the deficit at all. It's that the unemployed are lazy, unmotivated, and probably unethical: cut their benefits and they'll find a job fast enough.

Be it understood: I have no doubt that there are those who really are lazy bums, who scam the system, who remain out of work not because they'll make as much on unemployment as on the job, but because the difference between a paycheck and an unemployment check might be small enough to make staying out of work more attractive. But surely these people are a small minority, and the overwhelming majority of people currently out of work are in fact trying desperately to find employment: indeed, according to a very interesting article by Heather Boushey, Christine Riordan, and Luke Reidenbach, writing for the Center for American Progress and the National Employment Law Project:
At the end of May, nearly half of those unemployed (46 percent) have been out of work and actively seeking a job for at least six months, a post-World War II record high. Currently, there are nearly five workers actively searching for work for every job available, compared to just one and a half job searchers per job opening before the Great Recession began.
That people would prefer to seek employment in a field for which they have training and experience—provided that their skills are both current and relevant—doesn't strike me as an unreasonable desire. Perhaps some additional safeguards against abuse might be appropriate (I'm not necessary advocating this; I just don't know), but the whole foundation of unemployment compensation is that the only people receiving it are those who have been part of the work force but for reasons beyond their control are temporarily out of a job. That the current economic malaise means that more people are in this situation longer strikes me as self-evident.

Yet the entire Republican Party seems to be gravitating en masse towards this curious and frankly rather distasteful blame-the-victim mentality. It is long overdue for the leaders of the GOP to go on the record to suggest that Americans currently out of work are, as a group, neither unmotivated nor unethical: and that means a frank repudiation of the likes of Kyl, DeLay, Corbett and Angle. If the RNC and the minority leaders of the two houses won't do so out of ethical necessity, then they should do so out of self-interest. After all, if the unemployment numbers are created by sluggishness not in the economy but in the workforce, they can't very well be blamed on Obama and the Democrats, can they?

Be it noted: I am not so naïve as to think that the GOP won't try to have it both ways, but they'll sacrifice any credibility they might have had. Or such, at least, is the consummation devoutly to be wished.

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