As David Leonhardt explains in today’s New York Times, Congress shouldn’t let the need for long-term deficit reduction prevent it from passing a jobs bill to address today’s historically high unemployment rates. Or as I put it last week, the current deficit to worry about is the jobs deficit.
One argument we can quickly toss aside is that the time for stimulus has passed and that we no longer need extra unemployment insurance (UI) benefits and COBRA health insurance for unemployed workers. As the chart shows, Congress has provided extra weeks of UI benefits in every recession in the last six decades, and it has always waited for the unemployment rate to fall substantially before terminating the program.
In fact, the highest the unemployment rate has been when the temporary program expired was 7.3 percent (in April 1985). Right now it stands at 9.9 percent.
Last week the House passed a bill to extend through November the program providing extra weeks of UI benefits, but the House dropped provisions that would also have extended COBRA coverage and fiscal relief for states. These changes make little economic sense. Leonhardt is right to point out the high stimulative value of fiscal relief, which “prevents layoffs of teachers, emergency medical technicians and other workers.”
The ball is now in the Senate’s court. When it returns to work next week, the Senate needs to enact a more robust and effective jobs bill.