For the past several weeks, many Democrats up for reelection have been promoting legislation that would extend emergency unemployment benefits, increase the minimum wage, and demand equal pay for women. As the Washington Post recently put it, Democrats “have declared themselves the party that will ensure a “fair shot” for all.” Branding themselves as the party of “fairness” will help them avoid another midterm election like 2010, or so their thinking goes.
But are nice sounding slogans really what America care’s about, or should constituents consider a bit more?
Rep. Nancy Pelosi (D-CA)14% said in a news conference Thursday that unemployment insurance (UI) stimulates the economy and creates jobs. For several weeks, many Democrats and some Republicans from states with high unemployment, such as Sen. Jack Reed (D-RI)9% and Sen. Dean Heller (R-NV)55%, have been advocating for an unemployment benefits extension.
A bipartisan group of lawmakers reached an agreement Thursday on a retroactive five-month extension of unemployment insurance. According to CQ (sub. req’d), the $9.7 billion plan was apparently “fully offset by spending cuts or revenue-raising measures.” That sounds good until the gimmickry behind these pay fors are revealed.
Among these offsets is the budget window accounting gimmick, “pension-smoothing,” which would “allow companies to lower some payments to pension funds by allowing a longer 25-year window for an interest-rate average used to peg the future value of funds.” It is similar to an offset that was contained in the 2012 surface transportation reauthorization. There is also “a provision to allow operators of single-employer pension plans to prepay their flat-rate premiums to the Pension Benefit Guaranty Corporation.”
The Committee for a Responsible Federal Budget says this gimmick “saves the government money in the short term, [but] it increases future deficits by more than it saves.”
The Heritage Foundation’s Romina Boccia explains this provision could lead to another taxpayer pension bailout:
This matters because the interest rate calculation is supposed to keep the pension plans adequately funded. When corporations underfund their pensions and end up in bankruptcy, the U.S. taxpayer could be on the hook for a pension bailout through the Pension Benefit Guaranty Corporation (PBGC), a federal agency.
This unemployment insurance extension may be politically expedient, but it would pose an undue risk and burden on taxpayers.
They’re at it again. The liberals in Congress, following the lead of Sen. Harry Reid (D-NV)13%, are pushing for a three-month extension of unemployment insurance. The bill they’re championing would allegedly provide flexibility for companies to reduce deductible corporate pension fund contributions. They are using a tactic called “pension smoothing,” which is merely an accounting trick that could lead to a taxpayer bailout.
Last week, Sen. Harry Reid (D-NV)13% and Senate Democrats adopted the motion to proceed on the Emergency Unemployment Compensation (EUC) Act. This so-called “emergency” has lasted for six years. A vote is scheduled this week in the Senate as liberals try to extend it for another year.
These lengthy benefits actually hurt the very people they are intended to help by incentivizing people to wait longer to look for work. According to multiple studies, the longer people wait the less likely they are to be hired. The policy is bad for the recipients, the economy, and taxpayers.
Extending the EUC program is an empty gesture to mask the Obama administration’s failure to turn things around.