Why won’t Congress help the jobless?

MORE THAN 2 million of the longest-suffering victims of the Great Recession have been cut off by Congress' failure to reauthorize extended federal unemployment benefits--pushing them and their families to the edge of destitution.

Incredibly, the Washington stalemate over aid for the long-term unemployed is dragging into a second month, with no hope for an end this week, nor any certainty of one after that--thanks to the obstructionism of lie-spouting Republicans, but also the refusal of Barack Obama and Democrats in Congress to stand up to them.

Rather than provide the help the unemployed desperately need and come up with a plan to create jobs for the 15 million Americans officially counted as jobless, the politicians of both parties are complaining about the government deficit and vowing to cut spending, rather than increase it. If that happens, workers in the U.S. will pay an even steeper price than they already have.

UNEMPLOYMENT HAS taken an immense toll--a total of 8 million jobs disappeared during the recession. And there's no signs of improvement. Even the anemic monthly increases in overall employment reported by the Bureau of Labor Statistics in the first months of the year went into reverse in June after temporary jobs with the U.S. Census Bureau came to an end.

The announcement that the unemployment rate dropped by 0.2 percent in June came with this grim explanation: More than 650,000 people became so discouraged about the prospect of finding work that they dropped out of the workforce altogether and are no longer counted in official statistics.

The number of long-term unemployed--people who have been out of work for 26 weeks or more--is at an unprecedented high. Only once in the past 60 years have the long-term jobless made up more than 25 percent of the total unemployed--currently, they are 46 percent and rising. Some 1.4 million of the unemployed, almost 10 percent of the total, have been out of work for 99 weeks, which puts them past the limit for unemployment insurance, even if Congress reauthorizes extended benefits.

And these statistics don't account for the millions who are classified as underemployed--people who have had to take part-time jobs because full-time work isn't available.

The effects have reverberated through U.S. society. According to a Pew Research Center survey, 55 percent of adults in the U.S. workforce say they have either been unemployed, taken a pay cut, had their work hours reduced, or become involuntary part-timers.

And yet Congress in the Obama era can't agree on emergency measures that were routinely passed even during the Bush years.

The obstacle to reauthorizing extended benefits is in the Senate. A united minority of Republican senators, plus one Democrat, Ben Nelson, is holding the measure hostage with a filibuster unless the $33 billion cost is offset by other spending cuts.

The Republicans' open contempt for the jobless has been infuriating. Arizona Sen. Jon Kyl was repeating a favorite GOP talking point when he declared: "[C]ontinuing to pay people unemployment compensation is a disincentive for them to seek new work."

No one who looks at the facts could take this seriously. The long-term unemployed aren't still jobless because they're enjoying the high life off an unemployment check that averages just over $300 a week--not much above the minimum wage, and not nearly enough to keep a family of three above the official poverty line.

The problem is that there aren't any jobs for the jobless. According to government statistics, there are almost five unemployed workers for every one job opening. Overall employment has grown since the beginning of the year, but not fast enough to keep up with the natural growth in the population, much less replace the 8 million jobs lost in the recession.

And for some some people who are jobless today, they may not work ever again--not because they're "lazy," but because age discrimination has made it even more difficult for workers in their 40s and 50s.

So it's no surprise that millions of people have faced the same experience as a Virginia resident who was laid off from a corporate finance job three years ago. "Before this," he told the Washington Post, "I figured that if you can't find a job in two years, you're not looking. But I keep looking, and jobs just are not there."

With experiences like this so widespread, Barack Obama and the Democrats could easily go on the offensive against Republicans like Kyl and force the GOP to give up its filibuster. Instead, the Democrats have run in the exact opposite direction.

Why? For one thing, a lot of Democrats don't necessarily disagree with the Republicans. Consider this comment from a senator last month: "We have 99 weeks of unemployment insurance now. The question becomes how long do you continue it before people just don't go back to work at all?" It came not from a right-winger like Kyl, but California Sen. Dianne Feinstein, a hero to liberal Democrats.

Senate votes last month on the legislation to reauthorize extended benefits couldn't even muster a 50-plus majority, much less the 60 votes needed to overcome a filibuster. And this was even after the bill was loaded up with provisions to extend several business tax breaks, in a pander to Republicans and conservative Democrats.

THERE'S A deeper reason for the Democrats' spineless behavior on this question. In spite of the depth of the economic crisis and the crying need for government action, the Obama administration and Democrats in Congress remain in thrall to all the old dogmas of free-market neoliberalism that dominated mainstream politics for the past generation.

Thus, the administration is responding to Republican hysteria about "runaway spending" and "big government" programs with...promises for cuts. In early June, White House budget director Peter Orzag ordered government departments and agencies to cut 5 percent from their budgets. That comes on top of Obama's promise to freeze spending at most agencies--naturally, the Pentagon is exempt--for the next three years.

The cuts would come on the heels of huge spending reductions at the state and local level that have undermined the effect of the administration's $787 billion stimulus package from early 2009.

Liberal economists, like New York Times columnist Paul Krugman, are warning of the threat of a "double-dip recession" brought on by some combination of the continuing stagnation in business investment, sluggish consumer spending and the impact of the financial crisis in Europe. Krugman makes the case that another government stimulus measure is necessary--yet the Obama administration is preaching the opposite.

The scale of the government deficit, which was already growing at an explosive rate during the Republican Bush years, does put the administration in a bind. But any attempt to reduce the deficit through taxing the rich or cutting the Pentagon budget is "off the table" as far as the administration is concerned.

So, for example, in a CNBC interview this month, Treasury Secretary Tim Geithner said the Obama administration planned to keep the top tax rate on both capital gains and dividend income of the rich at 20 percent next year. That's an increase over the current 15 percent, but far below the 39.6 percent top rate that some congressional Democrats proposed.

The upshot is that any taxpayer making more than $34,000 a year will have their income above that taxed at a higher rate than the super-rich pay on all the money they rake in from their investments.

The money exists in the economy to stop all the cuts at the federal, state and local level--in fact, to increase spending. But getting it would mean taxing the rich and corporations. Indeed, U.S. corporations are holding onto cash at record levels right now--which means, among other things, that they aren't investing in any expansion of production that would create jobs. According to Bloomberg Businessweek, the $1.84 trillion that U.S. corporations other than banks had on hand during the first quarter of the year was at the highest level compared to total corporate assets in half a century.

In the early months of 2009, political leaders like Barack Obama seemed to represent a new direction in government economic policy--to use stimulus measures to spur a slumping economy. One year later, all the old mantras about balanced budgets and debt reduction are back.

Of course, Corporate America was perfectly happy for the U.S. government to use taxpayer dollars--in much larger quantities than Obama's stimulus measures--to bail out Wall Street. The establishment has changed its tune and will keep up demands for austerity, because they know Obama and the Democrats will concede at every step.

Any challenge to the drive for austerity will have to come from below. The AFL-CIO, NAACP, National Council of La Raza and other organizations are planning a demonstration on October 2 to call for jobs. In the meanwhile, the struggles taking place locally to confront budget cuts and austerity can be a starting point for building a challenge that Washington will have to pay attention to.