Creating Unemployment

House Chamber, Washington, D.C. 
July 22, 2010

 M. Speaker: 

Anyone who has experienced firsthand the quiet panic that stalks every waking hour of an unemployed family knows how frightening and debilitating is chronic unemployment.  You watch your savings evaporate, you see your children going without the material things their friends enjoy, and you count down the months or even weeks until you won’t be able to make that crucial rent or house payment.

That unemployment check is a lifeline in such times, and I fully appreciate and understand how desperately an unemployed family is looking to the security of getting 99 weeks of such checks.

But I can’t go along with this for a simple reason: The only way out of this nightmare of unemployment for these families is a job. 

Speaker Pelosi has said that the most important thing we could do to create jobs is to extend unemployment benefits to 99 weeks, because the unemployed would spend this money and stimulate the economy.

This analysis completely ignores the harsh and glaring fact that before this money can be put back into the economy, it must first be taken out of that same economy.  We will have to take $34 billion more out of the economy in order to finance these extra benefits through November.  In fact, this is the eighth such extension, totalling $120 billion – meaning over $1,600 from the pocket of an average family of four.

And since we don’t have that money, we’ll have to borrow it from exactly the same capital pool that would otherwise have been loaned to businesses seeking to expand jobs or to homebuyers seeking to re-enter the housing market or to consumers seeking to make consumer purchases – and remember that 2/3 of economic growth depends upon consumer spending. 

But that money now won’t be there to loan for jobs and homes and economic growth. 

This is $34 billion of relief to the unemployed that they desperately need and that I desperately wish we could responsibly extend.  But to do so would also mean $34 billion of fewer jobs.  It means perpetuating this never-ending nightmare of unemployment for these families and, indeed, throwing more families into that nightmare.

We’ve been told for several years now – by both Presidents Bush and Obama – that stimulus spending would help the economy.  But it hasn’t.  And there’s a reason it hasn’t: Government cannot inject a single dollar into the economy that it first hasn’t taken out of that same economy.  Government cannot provide a dollar of temporary relief to the unemployed without first removing a dollar of permanent relief for the unemployed – a job.

The talking point du jour from the other side is, “Republicans have no problems giving tax breaks to the wealthy but won’t extend a lifeline to the unemployed.”  Once again, they just don’t get it.  Milton Friedman once observed that spending IS the effective level of taxation.  Spending can only be paid for in two ways – current taxes or future taxes.  High taxes and deficits are just the symptoms.  The problem is the spending – and this is a spending bill.

On May 9, 1939 – after nearly a decade of unemployment checks and stimulus spending – and with unemployment at 17.2 percent – Franklin Roosevelt’s Secretary of the Treasury, Henry Morgenthau, made this stunning admission during a meeting with Democratic Members of the House Ways and Means Committee.   He said: “No gentlemen, we have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong as far as I am concerned, somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"

M. Speaker, let us heed the lessons of history before we totally destroy our economy.  Perpetual unemployment checks put these desperate families farther and farther away from the only thing that can truly end their suffering – a real job.  That’s a fact nobody wants to face around here – but until we do, chronic unemployment will continue to stalk the land, and God forbid that a few years from now another Democratic Secretary of Treasury will have to make the same admission as Henry Morgenthau did 71 years ago.
 

 

 

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