Unemployed Left Out in the Cold in 2010 Budget

Posted by Michael A. Kamperman on February 1, 2010

President Obama’s 2010 budget is not only a jobs killer, it is heartless.  The military has a motto that no man should be left behind.  If a comrade in arms falls, then you do everything possible to save them.  Apparently this motto does not extend to the unemployed.  If they fall they are on their own, just as if they were in the streets of Pamplona running with the bulls.  The President’s new budget cuts unemployment benefits by $75  billion, which is almost a 50% reduction.  Yet the Whitehouse estimates the unemployment rate will only fall to 9.8% by the end of 2010.  The only explanation is the President is willing to let unemployment benefits run out for those who are unable to find work.  This despite the fact that there is still only one job opening in America for every six applicants.  Furthermore, the budget cuts over $10 billion from federal construction projects ranging from the military to schools.  Construction spending in the U.S. was reported to fall by 1.2% for the second month in a row.  Construction projects equals jobs.  Cutting construction projects is equivalent to cutting construction jobs.  Furthermore, unbelievably the budget cuts Medicaid expenditures by more than 10%, or $33 billion.  Surely the President is not in favor of cutting health care to the poor.  The only explanation is the President is willing to let the states pick up more of the tab for Medicaid.  Never mind of course that the states are broke and they cannot print money like the federal government. 

The federal budget deficit faces a paradox.  There is no way to cut the deficit unless spending is cut.  Alternatively, there is no way to significantly raise tax revenues unless unemployment rates are significantly  lowered and people are put back to work.  So there are two paths to lowering the deficit; by cutting spending or by putting people  back to work.  Growing the econ0my will benefit both the employed and the unemployed.  Cutting federal spending will not benefit the unemployed and it will not benefit anyone else.  It will ultimately raise the taxes of those still working while austerity measures are put into place.

Unemployment is the number one issue in America, not deficit reduction.  People want and need jobs.  The President will not succeed by rhetorically expressing a concern for the unemployed while deploying policies that do not create jobs.  Yes, the President’s budget includes $100 billion worth of job creation measures.  But consider that we have lost several million jobs since the $787 billion stimulus bill was enacted.  If we lost several million jobs spending several hundred billion dollars, then is it plausible we will create millions of jobs if we simply spend $100 billion more?  What we need is a one trillion dollar jobs bill that includes construction spending and aid to the states.  Instead, we get not only a cut back in unemployment benefits but a cutback in federal construction spending and a cutback in Medicaid spending, which means a cutback to the states.  Both FDR and Reagan focused on economic growth.  They arguably had the most successful Presidencies of the 20th Century.  Herbert Hoover focused on the limitations of the federal government during an economic crisis and he arguably had the least successful Presidency of the 20th century.  It’s not that Hoover didn’t try.  He didn’t try hard enough.  History will only judge President Obama by the outcomes of his Presidency, not his intentions.  Like Hoover he will be remembered by whether or not he created jobs, not by whether or not he cut the deficit.

 

 

 

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