Opening Statement of Ranking Member John Linder
(REMARKS AS PREPARED)
Today’s hearing offers a valuable chance to review the effects of Democrats’ so-called economic stimulus legislation on workers and especially the unemployed.
But instead of discussing how many unemployed Americans have gotten a job — because that didn’t happen in the wake of last year’s stimulus bill, much less this year’s — our colleagues will tout how many more and bigger unemployment checks are being paid.
As a result of the most recent stimulus legislation, unemployment benefit checks can stretch for more than 18 months in 11 States, for at least 17 months in 26 States, and for at least 14 months in 42 States. Workers today can collect twice as many unemployment checks paid for by Federal revenues than are supported by their own employer’s payroll taxes.
And this is only the beginning. As unemployment rates keep rising, more and more States will pay workers a year and a half of benefits. For someone laid off this month, that’s through October 2010. But the temporary extended benefits program, already extended and expanded twice, is now scheduled to pay its last benefits in May 2010. Even under the Administration’s overly-optimistic assumptions, the average unemployment rate in 2010 will be 7.9 percent; CBO says 9 percent. Raise your hand if you think the extended benefits program will expire at those levels.
The simple truth is we will see more extensions of unemployment benefits, perhaps through the balance of this Administration, costing a total of $100 billion or more. And that would be on top of $300 billion in regular unemployment benefits over that same period.
Now that’s real money, to quote the President.
And none of this is necessarily connected with helping long-term unemployed individuals get a job. On the contrary, numerous studies confirm that longer unemployment benefits lead to slower returns to work. One expert stated flatly: “Each unemployed person has a ‘reservation wage’—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing an unemployed person to remain unemployed longer.”
The author? Director of the President Obama’s National Economic Council, Larry Summers.
As infomercials say, “but wait, there’s more.”
The stimulus bill nationalized the previously Federal-State extended benefits program, encouraging all States to claim “free” Federal funds for paying longer benefits. It now pays a Federal bonus of $25 per week to each unemployment recipient. And perhaps most famously it offers States temporary Federal funds if they permanently expand benefits, including to part-time workers and job quitters. All without precedent, all promoting higher taxes, and all making States increasingly dependent on Washington.
The irony is Americans want jobs and paychecks, not layoffs and unemployment checks. And for good reason. Unemployment checks can never replace earnings from work. And these benefits are certainly not free – it takes taxes to pay them, and those taxes are already poised to rise in the depths of this recession, with far more to come. All of which will harm job creation, as we will hear from the only employer and unemployment taxpayer testifying before us today, Mike Mitternight of Metairie, Louisiana.
So while we hear about the thousands of additional unemployment benefit recipients collecting benefits as a result of this trillion dollar bill, we need to ask a few simple questions:
Where are the 500,000 jobs Speaker Pelosi predicted would be created by last year’s stimulus? Or the 1.7 million jobs the Economic Policy Institute, one of our witnesses today, said would be created then?
The reality is they never existed. And 5 million real jobs have been destroyed since the Speaker made her prediction.
Further, where will the 3.5 million jobs come from that Democrats promised this year’s stimulus plan would create?
We all would like to know, especially since the point of this legislation, as the Speaker noted was “jobs, jobs, jobs.” Yet in the past two months we have seen 1.3 million more job losses.
Even in this town, that gap between promises and achievement is stunning.
Attached: Letter from the U.S. Chamber of Commerce, submitted for the record