Economy & Budget

Groundhog day?

Groundhog day?

Feels like Groundhog Day, again. Congress is debating another extension of unemployment benefits, with both Republicans and Democrats deploying “talking points” to portray the other side as emotionally detached from unemployed Americans’ plight. This is all very cynical, because it has nothing to do with solving the problem. As in the minimum wage debate, Congress and the Obama administration ignore the real goal-getting people back into the workforce.

We’ve been here before, too. And it’s time to stop this running around in circles. Here’s how.

First, please end the gamesmanship of giving laws warm and fuzzy titles that only serve to mislead. Politicians’ misuse of language to showcase their ostensibly “common sense” approach to solving public policy problems is an insult to most American’s intelligence. You know what I’m talking about. Just like the “Affordable” Care Act turned out to be decidedly unaffordable, what we saw in Congress last week was not so much a vote on unemployment insurance, but a vote on whether to perpetuate the subsidization of joblessness. Sound harsh? Perhaps. But if government were to set out to restore its citizens’ self-esteem, throwing more money at them isn’t the way to do it.

Second, let’s focus on actually returning people to work, not simply make joblessness less bad. We should recognize the perverse incentives that come along with most “charitable” public policies. And being out of work is bad. It’s bad for families and quality of life. It’s bad on an emotional level, bad for employers, bad for consumers, and a drain on the economy and taxpayers. Unemployment is so painful and undesirable that literally any job is preferable. Yet, that notion seems forgotten.

Take the recurring minimum wage debate. For proponents, it’s not about how many low-skilled workers will lose their jobs because of government-mandated wage increases for their more fortunate colleagues. Instead, it is a political log-roll to reward favored constituencies, in this case unions, whose members directly benefit at the expense of everyone else. In the end, it does little to alleviate poverty-an especially poignant reminder of the ongoing failures of President Lyndon Johnson’s “War on Poverty” on its 50th anniversary.

And so it is with extending jobless subsidies. As my colleague Aloysius Hogan argued last week in USA Today, “Unemployment insurance extensions in the past five years have kept at least 600,000 people out of the labor force.” Where there is less incentive to seek employment.well, you get the drift.

The basic jobless benefits, which are still in place, pay for 26 weeks, and to millions of people that is clearly important. But does it actually get people back to work? And do politicians actually care?

I remember a conversation with a Republican member of Congress who proudly self-identified as a “free marketer” and behaved as such. That is, until global trading trends and a declining U.S. textile industry led to thousands of job losses in his district. He began promoting protectionist policies, even though he knew that doing so was intellectually dishonest, economically nonsensical, and a disservice to his constituents, who were led to believe those lost jobs might come back some day.

Were those job losses real and did they cause pain? Absolutely. Did that lawmaker feel an obligation to help his constituents? Certainly. But there’s a right way to help and a wrong one, and he chose the latter. He seemed to forget that preventing market changes-and the creative destruction they bring-is a fool’s errand and that his misguided efforts were guaranteed to fail. Instead of promoting sensible, pro-market policy options-such as reforms to the education system or reductions of capital gains and other tax burdens on businesses and entrepreneurs-he sought to bind the wings of enterprise to freeze his constituents’ world in time.

If Congress feels it must legislate in this area-which is arguably best left to the states-it should try innovative solutions with better incentives. Economist Martin Feldstein has proposed creating self-insurance that could be spent during a stint of unemployment or kept for retirement, thereby encouraging workers to find employment as quickly as possible. Similarly, Sweden has implemented jobless benefits that taper down as time passes, also incentivizing quicker re-employment.

When will Congress admit that in the final analysis we have a spending and overregulation problem that’s got America’s job creation machine stuck in neutral? The real solution will require unbinding the wings of free enterprise.

One hopeful sign comes from a proposal by Kentucky Republican Senators Mitch McConnell and Rand Paul to create “Economic Freedom Zones“ to lower regulatory barriers to job creation in some disadvantaged areas-which were used effectively by President Reagan in America and Prime Minister Thatcher in Britain in the 1980s.

It’s a start, but we need much more. It’s simply well past time to stop the Groundhog Day replay.

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