The Unemployed and Businesses Need the Old Rep. Greg Walden
Chuck Sheketoff
Remarkably, Congress went on a July 4th vacation unable to muster the votes necessary to extend unemployment insurance benefits.
I’ll let Rep. Greg Walden of Oregon’s 2nd District explain why extending unemployment benefits is vital when a sustained economic recovery has yet to take hold:
Unemployment insurance provides targeted and effective economic stimulus. These critical benefits increase consumer spending in the hardest-hit areas and sustain and strengthen economic recovery.
Unfortunately, that’s was the old Rep. Walden speaking, a statement made back in 2002 when the previous recession had hammered Oregon and the nation.
The new Rep. Walden voted against an extension of unemployment benefits. He did so, even though his own district is a hard-hit area.
Oregon’s 2nd Congressional District had an unemployment rate of 11.5 percent in May.* That exceeded Oregon’s May unemployment rate of 10.6 percent and the nation’s May unemployment rate of 9.7 percent.
In June 2010, 2,994 Oregonians in Walden’s 2nd District filed new claims for regular unemployment insurance benefits.* That’s unsurprisingly 19 percent of all new claims in Oregon.
The failure to extend unemployment benefits threatens to derail the economic recovery, according to leading economists. Among them is Mark Zandi, chief economist at Moody’s Economy.com and a former advisor to Sen. John McCain’s presidential campaign. Zandi testified before a congressional committee in April (PDF):
No form of the fiscal stimulus has proved more effective during the past two years than emergency UI benefits, providing a bang for the buck of 1.61—that is, for every $1 in UI benefits, GDP one year later is increased by an estimated $1.61.
As noted by the old Rep. Walden, shutting off unemployment benefits before the economy is firmly on its feet harms the unemployed and the businesses in communities where they live. Walden explained the importance of unemployment insurance back in 2003, stating (emphasis added):
Tens of thousands of Oregonians who desperately want to find work are unable to do so. These statistics are more than just numbers; they represent real people who are struggling to make ends meet. Oregonians don’t want handouts – they want to get back to work.
While there are many signs that the President’s policies and the economic stimulus bills passed by Congress are beginning to turn the economy around, it’s essential that we maintain a strong safety net for dislocated workers until new jobs are created.
Unemployment compensation is as much about helping small business as it is the unemployed. These temporary benefits allow unemployed workers to buy groceries and other goods from local businesses and pay their monthly mortgage note and utility bills. When the ranks of the unemployed swell, the whole economy suffers, and these benefits are essential to help soften the blow of our high unemployment rate.
How much do extended unemployment benefits mean to the economy of Walden’s 2nd District?
Consider that in May 2010, laid-off workers in the 2nd District collected $16 million in federal extended unemployment benefits from the Emergency Unemployment Compensation program. (That amount includes an additional $25 per week in unemployment benefits, an important provision of the federal Recovery Act which Congress recently failed to extend).
Rep. Walden’s opposition to extended unemployment benefits is a recent phenomenon. Less than two years ago, in October 2008, the old Rep. Walden voted to extend them.
For the sake of his unemployed constituents and unemployed Oregonians in other parts of the state, and our state’s economy, let’s hope that Rep. Walden rediscovers his old self during this 4th of July congressional recess.
Let’s hope that when Congress returns on Monday, Rep. Walden will once again support extending unemployment benefits, and will call on his colleagues in the Senate to do the same.
As the old Rep. Walden has noted, the benefits are “critical” and the program is “essential” as it “is as much about helping small business as it is the unemployed.”
---------
* Not including a sliver of Josephine County that includes Grants Pass for which there’s no data.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.
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10:05 a.m.
Jul 9, '10
Of course, Walden isn't alone. The strategy of "No" has made the GOP caucus a bizarre and hypocritical crowd. I wonder, will it hurt them at all at the polls?
11:03 a.m.
Jul 9, '10
This may be a very naive statement, but when did pols stop giving a damn about the people they represent?
2:19 p.m.
Jul 9, '10
Greg Walden has about the safest GOP seat in the U.S. He doesn't have to be accountable to anyone, because the idiots who populate Eastern Oregon will vote for the right wing no matter who is there. The towns of Eastern Oregon are all economically depressed. Unemployment is sky high. But abortion and hating gays and Mexicans is what sells there.
3:27 p.m.
Jul 9, '10
While I agree that we don't need the new Greg Walden, I can't see that we need the old one either. What we need are voters in the 2nd District who actually vote in their own economic interests.
That said, I appreciate the clarity of your compare and contrast, and of how important this issue is to Walden's constituents.
5:23 p.m.
Jul 9, '10
Chuck,
A couple of points:
You can't compare the 2002 recession to the current recession at any level. 2002's recession was short-lived, and doesn't carry with it the same future deficit and federal budget implications that our current recession does.
At what point do you stop? What if unemployment rates remains high for another year or two? Does the government continue to pay that money out for another 12-24 months? I don't see how that makes financial sense.
In my view, government isn't meant to carry the water forever, only to help for a short period of time.
However, I will say, that it would've made more sense to use a portion of the stimulus funds to pay for unemployment benefits, rather than infrastructure projects that have not yielded long-term employment opportunities for a majority of the population (with the exception of saving mainly public-sector jobs).
6:13 p.m.
Jul 9, '10
Agreed. This recession needs far more safety net spending and bigger economic stimulus spending than previous ones.
Extending unemployment benefits for the entire rest of the year would be less than 5% of the total Federal deficit for 2010 and is less than 1% of Federal budget. SImply allowing the BUsh tax cuts for the rich to expire this year will shave $4 trillion off of the projected deficit over the bent ten years. Ending the war in Iraq and Afghanistan would cut more than 2/3rds of the deficit right off the bat.
see this chart from the CBPP based on the CBo numbers:
http://images2.dailykos.com/images/user/6685/chart_of_the_day_bush_policies_deficits_june_2010.gif
When unemployment goes down enough that a full recovery will carry the rest of the way through.
Then you keep extending unemployment benefits.
Yes.
So cutting off unemployment benefits will somehow lead to more consumer spending which is what drives job hiring?
Cutting off unemployment makes zero sense at all.
It is meant to carry water until the private sector can regain its footing enough that it rehires enough people be a self-sustaining recovery. The only thing that can and does turn around economic activity in a large down-cycle is counter cyclical spending It is how we got out the Great Depression, through the largest public works program in human history which was deficit sending on scale never imagined possible (over 125% of total GDP over the course of nearly a decade.
More backwards thinking. Infrastructure spending is precisely the sort of stimulus spending needed, which not only is counter-cyclical spending, but on projects that NEED to be undertaken and yield long term economic benefits. Unless you think that the private escort can function without roads and bridges which are crumbling through decades of neglect and use.
(cont.)
6:13 p.m.
Jul 9, '10
(cont.)
You do realize that almost all infrastructure projects are contracted out to private escort companies, yes? Furthermore, do you think that somehow public escort employees don't spend their money in the private sector? They don's shop in local grocery stores, buy goods and services in their local economy?
Demand-side economics is the only thing that will enable a recovery (near and long-term). Companies simply do not hire unless they have a demand for their goods and services. Cutting off unemployment checks only exacerbates the problem we are facing by "firing" more customers which businesses are in desperate need for in order to maintain and/or improve their business. As a businesses owner, why would you want to see your customers fired?
6:17 p.m.
Jul 9, '10
Public sector somehow came out public escort there when I typed it. Typo humor deluxe.
Oh, for an edit feature. ;)
8:00 a.m.
Jul 10, '10
At least you didn't leave out the "L" in public like the Secretary of State did in 2002 http://www.ocpp.org/2002/nr020419.htm.
9:21 a.m.
Jul 10, '10
Best. Typo. Ever. And you did it twice!
4:36 p.m.
Jul 10, '10
We never did it...the Secretary of State did it. And yes, the best typo.
12:14 p.m.
Jul 11, '10
Very nice.
(This is mostly a test comment - bold, italic, bold and italic - so just ignore it.)
12:30 p.m.
Jul 11, '10
Dyslexics of the world, UNTIE!
Hey, this is more proof that progressives favor the working class. (wry grin)
5:56 p.m.
Jul 10, '10
Um, Jason, it'd be really special if you and your political kindred spirits would be just as tight with spending when it comes to, oh, say Afghanistan.
Fiscal conservatism that puts U.S. citizens in thumbscrews but ignores the mega-waste in senseless military adventures strikes me as faux fiscal conservatism.
9:32 p.m.
Jul 9, '10
Agreed, Walden's seat is pretty safe but please turn down the hyperbole just a bit Mr. Ryan. You're disturbing the neighbors.
8:23 a.m.
Jul 10, '10
Hyperbole? I grew up in that part of the country, born and raised. No exaggeration at all! In fact it's become much worse. People there live on hate and ignorance. In Klamath Falls the sheriff used to lock up Klamath Indians without any habeas corpus, without seeing a judge or an attorney and was congratulated for it. More recently during the recent legal disputes over the water rights in K. Falls, the sheriff and his posse rode their horses and threatened the Klamath Indians and their supporters with violence if they got in the way of the vigilantees who were illegally opening the irrigation canals. Anyone who really wants to succeed moves away from there.
9:47 p.m.
Jul 9, '10
But he's such a nice guy.
I'm with Mr Ryan even when unemployment is down in the rest of the state and country it's still at unacceptable levels in Central and Eastern Oregon. Rural timber communities have historically been boom bust economies, but Rep Walden seems to still believe that there's timber boom in the future if only those evil environmental would just leave us alone.
8:50 p.m.
Jul 10, '10
Chuck, at what point do we turn off the unemployment spigot? You conveniently leave out the differences between 2002 and 2010 regarding the number of extensions already voted in.
by now I'll bet long term unemployed would prefer a job to unemployment. How about a massive and TRUE stimulus in the form of bridge building and infratsructure repair instead of the meaningless spending that has failed miserably thus far?
10:56 p.m.
Jul 10, '10
Conservatives like to say that the best stimulus would be a tax cut - since that puts money in people's pockets, and lets them spend it however they want, in a sort-of little-d democratic stimulus.
Seems to me that unemployment benefits are exactly the same thing - only more effective, since someone who is unemployed is going to spend all of it.
7:47 a.m.
Jul 12, '10
Yes, they'll likely spend all of it, but it will be sustaining past spending patterns. It won't be new spending. It will be for essentials like food, utilities, rent, mortgage, tuition.
It may stop the decline, but it won't invigorate as new spending will do.
I do feel for those who have been unemployed for such a long time. Even those who have saved for a rainy day have likely expended all their emergency funds. I know several people who have exhausted their savings, their retirement and their borrowing ability from friends and family.
I wish there were a simple solution.
12:02 a.m.
Jul 11, '10
I thought that we were already doing a small tax cut. Not certain that is working out so well. Maybe we are facing a similar reaction that Japan went through in the 1990's. folks refused to spend and instead began saving.
12:41 p.m.
Jul 11, '10
What is not mentioned here is the obvious. This is not about Greg Walden or the 2nd district. It's about the political calculation that the GOP has made nationally to do everything to make the economy worse in order to enhance their own electoral prospects. The whole country is expendable in that calculation.