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19 Jul, 2010 22:48

Obama calls on Republicans to support expanded unemployment benefits

The US Senate is set to vote July 20 on a bill that will restore unemployment benefits for millions of Americans. Senate democrats are hoping to avoid a filibuster and pass the package with bipartisan support.

Democrats and Republicans are deeply divided on the issue, which has provoked fierce debate.

President Obama has slammed his opponents for attempting to deny help to millions of Americans.

“After years of championing policies that turned a record surplus and a massive deficit, the same people who did not have any problems with spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we should not now give relief to the middle class Americans like Jim or Leslie or Denise who really need help,” criticized Obama.

The proposed bill extends the deadline for filing for unemployment benefits to the end of November.

The move will cost $33 billion in additional deficit spending.

Republicans are concerned about the expense, and say any extension of benefits should be offset by spending cuts.

Blogger Danny Schechter says the debate is actually a political battle in which the American government has to be pro-active to try to stimulate the economy and to try to generate jobs – something they have not been doing well enough so far.

“There is an ideological group among the Republicans and some other economists who feel that Obama cannot have any victories; he cannot be able to claim that he did anything positive, so they are just a ‘Party of No’. They would vote against anything he proposes because he is proposing it,” revealed Schechter, adding that “It is masked as an economic debate, but it really is not. It is a political difference at its core.”

One of the primary debates over US economic policy concerns too much spending vs. extending government funded unemployment benefits. Many Republicans oppose the bill on the grounds it expands government spending and increases the deficit.

I think there are actually good arguments in terms of spending and stimulus and unemployment on both sides. I don’t think there’s much doubt that is we really ratchet back on the spending and stimulus that there will be a slowdown in the economy, but on the other hand we do need the kind of restructuring that can only happen when the government kind of removes the training wheels of the economy and we’re forced to adjust,” said Joe Wiesenthal, the deputy editor of The Business Insider.

Wiesenthal argued however that while the deficit is an issue, “we do not know how it is going to play out” and that adding unemployment benefits will not bankrupt future generations.

Although the rest of the United States is suffering, the economy of the capital, Washington, DC, has remained quite stable.

Wiesenthal said that the expansion of government and the increase in lobbying and other government related businesses has helped sustain the DC economy. A larger government means more government jobs, more lawyers and lobbying efforts, a greater number of political staffers and think tanks, and more invested interest in connected markets.

It’s kind of a new system for the sort of elite and well connected to stay rich and stay employed while the rest of the country suffers,” said Wiesenthal.

Wiesenthal added that some state level jobs have become dependent on federal money, including law enforcement and emergency services. Their funding often comes from stimulus type programs. Cutting more spending and ending such programs could potentially create disarray for those who are dependent on the money.

Mike Norman, chief economist with John Thomas Financial, argued that the argument to simply cut spending is wrong.

This idea that somehow austerity, cutting spending, reduction of output, total output of goods and services in the economy, that somehow that creates wealth, I mean, that’s just ludicrous. It doesn’t happen. What happens is that the economy shrinks; you have higher levels of unemployment, thereby creating less output of goods and services, which comprises the real wealth of the nation,” said Norman.

He argued that the US needs to do the exact opposite. He said the government needs to spend more to invest in the economy to expand commerce and economic growth. For example, a high level of investment in public infrastructure, energy and public education would lay a foundation for real economic wealth in the future, he explained.

Norman said there is an irrational fear of social programs and the national deficit, which he described as an “arbitrary number.”