Unemployment Benefits

Floor Speech

Mr. REED. Mr. President, today we have an opportunity to assist literally hundreds of thousands of families across this country who are out of work through no fault of their own, who are battling with the most severe economic downturn since the Great Depression, who are chasing jobs that have disappeared, and they are looking everywhere to try to find work. We have the opportunity to extend unemployment benefits for an additional year.

In my State of Rhode Island, people are in a very serious situation. They are struggling to stay in their homes, to educate their children, to deal with the challenges of everyday life. They have worked hard and long all of their lives, and now they are finding it difficult to find a job.

In every situation previously in this country, we have come to their assistance. We have done so by extending unemployment benefits. We have never failed to do that as long as the unemployment rate was above 7.2 or 7.4 percent. Today across the country, it is close to 9 percent nationally. In my State of Rhode Island, it is much higher. We have always done it on an emergency basis because it truly is an emergency. We haven't had to offset because we have always determined that it was necessary to get the money to the people who could use it, who needed it desperately, and we should do that again.

I find it difficult to understand how some of my colleagues on the other side would object to an extension of unemployment benefits for a year that are not offset but at the same time insist that we provide tax cuts to the very richest Americans, without paying for them, and insist that we add approximately $700 billion to our deficit by extending tax cuts for people making over $250,000 a year--and many making many times that amount--yet for unemployed Americans desperately seeking work and not finding it, they would insist that we not only have to pay for it, but we have delayed and delayed the process of getting them assistance. It is difficult to justify those two positions.

It is also difficult to justify those two positions because what we know is that unemployment compensation benefits give us a much bigger bang for the buck than the extension of tax relief to upper income citizens. The Congressional Budget Office has rated the effectiveness of various techniques to provide assistance and stimulate demand in the economy. They have found that unemployment insurance is far and away the most effective form--much more effective than tax cuts to the wealthy.

CBO estimates that for every dollar of unemployment compensation benefits that we inject into the economy, we get $1.90 of economic activity, which is almost a 2-for-1 payback. So we are in a situation where this is not only the appropriate policy to pursue, but it is the most effective one in order to keep demand and the economy and growth moving forward.

I am someone who believes in fiscal responsibility. That is why I took, in the 1990s, difficult votes in order to balance the budget under President Clinton, to raise not only our output but also to balance the budget and have a surplus in 2000. I opposed the proposal and the tax cuts favored by Republican colleagues in 2000 because I understood that the difficult, hard fought, fiscal responsibility could easily be frittered away because what looked like a surplus in 2000 could be affected by unforeseen events, such as terrorist attacks, natural disasters, or changes in the world economy that we could not contemplate. I knew how difficult it was in the nineties to get our house in order. I was opposed to these tax cuts. I hope everybody else realizes the demographics of the country at that time.

In 1993-1994, we took tough votes to build up a surplus because we knew what was coming. We had a demographic wave--the baby boomers--that would qualify for Medicare and Social Security, and that would, by the nature of the sheer size of that population, put extra demands upon our budget.

Despite all of that, taxes were cut, wars were pursued unpaid for. For the first time in the history of the country, we engaged in major military operations and didn't even make an attempt to pay for them. That is not the definition of fiscal responsibility. Yet many of the same proponents of that policy are urging us today that we cannot do unemployment compensation insurance unless we pay for it. But, of course, let's extend the Bush tax cuts for all Americans, including the wealthiest, and in that case add another $700 billion to our deficit over 10 years. That doesn't seem to make any economic sense.

This proposal is supported by people who are knowledgeable about the way the economy works. In a statement released today, 33 economists, including 5 recipients of the Nobel Prize in economics and 5 former chairs of the Council of Economic Advisers, have said:

Continuing the about-to-expire federal emergency unemployment insurance program, which provides extra weeks of benefits to the long-term unemployed, is sensible economic policy that will not only assist the unemployed but help maintain spending, overall demand, and employment at this critical point in the recovery. ......Eliminating these benefits, on the other hand, will cause hardship for the long-term unemployed, scale back spending, and weaken the economy since unemployment benefits are one of the most effective means available to support overall demand. Unemployment has remained above 9 percent for 18 months already and will likely remain high for some time to come, making a strong case for continuing the current program for another 12 months. Moreover, the special provisions for extending unemployment insurance during recessions have traditionally been financed by short-term fiscal deficits and this remains a prudent approach. The program will not contribute significantly to long-term deficits because its costs will diminish automatically as the economy recovers and unemployment returns to more normal levels.

Let me say that again in my own words. Our colleagues are suggesting a permanent extension of tax cuts that will cost, over 10 years, $700 billion, and presumably 10 years after that and 10 years after that. That is a huge structural change to our revenue. Unemployment compensation benefits are cyclical. They rise in difficult times, like today, and they fall as the economy recovers. So we are not talking about a long-term commitment to a program of deficit enhancement; we are talking about short-term relief for struggling Americans.

I think these economists make the case extraordinarily well. I ask unanimous consent that their letter be printed in the Record.

There being no objection, the material was ordered to be printed in the RECORD...

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Mr. REED. As I indicated before, their view has been echoed by the CBO. Tax cuts, in their view, are the least effective form of economic stimulus, and the most effective is unemployment insurance benefits.

On November 16, the Department of Labor released an independent study that was commissioned during the Bush administration. It found that since mid-2008, the Federal unemployment insurance program has saved 1.6 million jobs in every quarter, averting 1.8 million layoffs per quarter at the height of the downturn, and reduced the unemployment rate by 1.2 points.

Separately, the Economic Policy Institute has found that continuing the programs through the end of 2011 will support the creation of 700,000 full-time equivalent jobs.

People who get unemployment insurance benefits tend to take that money and go to the grocery store or buy shoes for their children or pay down, if they can, some of their credit card debt. Maybe in this holiday season they will buy an extra present for their children. That keeps our economy moving, and it keeps the people in the grocery stores working, people at department stores working, and the manufacturers producing these goods working.

Our economy grew at 2 percent in the third quarter and in a recent Wall Street Journal article, Goldman Sachs analyst Alec Phillips estimated that if unemployment insurance benefits expired, it would shave half a percentage point from growth. Such a decline would cost hundreds of thousands of jobs. So here is a policy that will expand jobs, maintain jobs, and if we don't pursue it, we will find ourselves contracting employment at the very time that all Americans are asking us to do something very clear-cut: get jobs, keep jobs, produce jobs, and find a way to create them. This could also engender a downward spiral because if the jobs contract, that could be the beginning of further contraction, and it could leave us in a worse situation.

So not only will families feel the brunt of this lack of unemployment compensation benefits, it is the small businesses throughout every community--it is the retailers and the people who depend upon their neighborhood customers to come in and buy the goods and services that not only provide them what they need but also provides the cash flow for small businesses to keep operating.

Failure to maintain unemployment insurance will mean that 2 million jobless workers will lose benefits in December. Two million Americans, this December, will stop receiving benefits. Several hundred thousand unemployed workers will lose their benefits every month, culminating in up to 6 million losing benefits by the end of 2011. Now is the time to govern, the time to act, and now is the time to do what we have always done in a situation like this. It is the time to act promptly and timely and pass an extension of the unemployment insurance benefits.

We have seen over the last year delay after delay. We have seen benefits expire only to retroactively be restored through procedural votes and delays.

One of the ironies is that we get these procedural votes that we can't move forward on a bill but, finally, when the bill comes up to a vote, there is overwhelming support, which suggests to me that the process of delay has taken primacy over the substance of policy. That is not worthy of our constituents and the crisis they face today in this country. We have, as I said, continuously maintained unemployment compensation benefits, and we have extended benefits whenever our unemployment rate nationally is above 7.2 percent. Republican administrations, Democratic administrations, Republican Congresses, and Democratic Congresses have always recognized that at the level of 9 percent unemployment, extended unemployment benefits were almost automatic--something you had to do for all the reasons I have cited, such as the economic effects on the economy, but most fundamentally it is giving people a chance to just make ends meet until they can find a job.

So I think we are in a position where we must go forward. Acting now is the right thing to do, the responsible thing to do, and the wise economic thing to do. We need to swiftly pass this 1-year extension.

Many colleagues are joining Senator Baucus, the chairman of the committee, in introducing this legislation. I urge at this point that we move forward, and at this point I make the following request.

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