Unemployment Benefits and My Scott Sumner Problem

     Call this the unemployment benefits edition. In my last post we looked at my Sumner problem in the capital gains taxes are terrible and should be zero edition.

      Krugman, the capital gains tax, and the lies of Scott Sumner

     http://diaryofarepublicanhater.blogspot.com/2014/03/capital-gains-taxes-paul-krugman-and.html

     There was a story in Newsday today about how many people on Long Island are suffering after losing their unemployment benefits.

      "Growing numbers of jobless Long Islanders are struggling to survive with little to no income since extended federal unemployment benefits ended in December."

      "Despite improving local unemployment rates and job growth, thousands of long-term unemployed are still unable to find work, and now many say they are running out of money to meet even basic expenses."

      "A bipartisan compromise was reached recently in the U.S. Senate to provide extended benefits through May, retroactive to December, but it faces an uncertain fate in the House."

     http://www.newsday.com/classifieds/jobs/for-jobless-liers-desperation-becomes-way-of-life-1.7551871

     Yes, the fate of these folks lies at the tender mercies of the House GOP. Kind of like being at the mercy of hungry polar bear. However, this is where I have a real problem with Sumner. All he ever does it tell us 'don't worry the Fed can offset this by more QE, or forward guidance or if it does NGDPLT or starts an NGDP futures market.'

    What this does is make the sad fate of all these long-term unemployed folks invisible. He basically denies their pain-it's like the misogynist-ie, woman hater-who comes up with all kind of clever tricks to try to convince us that don't' worry, not too many women are getting beat by their husbands so let's just forget about it.

     I don't buy that the Fed can by itself give us the optimum recovery from a Great Recession like we've had. However, even if it could this wouldn't mean we shouldn't do things like UI anyway. I mean the government would still have good reasons to want to help these suffering people-for one thing there are all kinds of social blowback that can incur, like more crime, vagrancy, a society with much more problems. Even if the Fed could totally deal with our AD problems there would still be the vexing question of distribution.

     Some like Mark Sadowski and Tom Brown tell me that Sumner just wants us to do his NGDPLT scheme and he leaves our fiscal policy to us-or at least our politicians. However, by criticizing anyone who criticizes something like allowing UI benefits to lapse-he never stops about how long 99 weeks or 73 weeks supposedly are-he's giving aid and comfort to these House Republicans whether he wants to or not-and I'm far from convinced he doesn't want to.

    "When Congress allowed extended benefits to lapse in December, 1.3 million Americans, including 13,699 unemployed Long Islanders, were left without the income. In the months since, more than 4,135 Long Islanders have come to the end of their 26 weeks of state benefits without the prospect of any federal help. Under the recent emergency compensation program, benefits -- including both regular and extended benefits -- had at one time lasted as long as 99 weeks in states where unemployment was worst but had been limited to 73 weeks by the time extended benefits ended in December."

     "Federal benefits have supplemented state benefits in times of high unemployment since 1970, with full federal payment for extended benefits enacted in February 2009. Extended benefits with costs shared by federal and state governments can be triggered when unemployment rates spike, but none are in effect. About 28,500 Long Islanders currently receive regular state benefits, and each week more will see those benefits expire, leaving most with little or no income."

     "The state Labor Department recently reported that Long Island's unemployment rate had dropped to 5.9 percent in January, compared to 7.7 percent a year earlier."

     "But the good news hasn't yet helped a 40-year-old Suffolk County woman, who asked to be identified only by her middle name, Jimena. She said she never expected she would still be unemployed more than a year after losing her job as a sales rep making $70,000 a year plus commissions."

     "I haven't gotten unemployment insurance since December, and now I don't have a dollar to my name," she said, noting her savings are depleted and her credit cards are nearly maxed out.
"For the last month and a half I haven't been able to sleep; I don't eat anymore. It's just like everything is worrying."

     She added, tearfully, "I feel like I'm in a hole and I don't know how to get out."

     Sumner's answer would be, don't worry you can eat QE.

     "For Jimena, the Suffolk woman, the $375 a week in unemployment benefits at least paid the rent on the apartment she shares with her daughter, 19. Now, without the benefit and her own resources, Jimena said she puts as much as she can on credit cards, gets occasional help from friends and the local church, and $189 a month in food stamps that don't go very far."

     "I never realized how hard it was to find a job until I was in that situation," she said, scoffing at those who suggest unemployment benefits make it easy for people to avoid having to get a job. "They don't know what they're talking about." She is hoping for a second interview for a sales job.
Puzzele, who said she loved the restaurant job she held for more than a decade, agrees. "When I hear on the news, it makes me upset to the extent that people in Congress say that people are lazy," she said. "But when I go to unemployment [office] most of the people there are older."
Feelings of anger and abandonment can haunt those who find themselves in distress after a lifetime of steady work and independence, people like Ann, 51, a Suffolk woman who asked that her full name be withheld to protect her privacy and job prospects after eight months of unemployment.
As a voter who had leaned Republican, she said she was "shocked" by the lack of support for extended benefits among the GOP in Congress."

     "People who had relied on unemployment insurance, she said, "are the people who are workers, the backbone of our society, and you are turning your back."

      Ann was clearly completely out of touch with reality coming in to this if she's surprised much less shocked that the Republicans would do this. It's what they live to do, they believe they're selected by God to do it and Sumner continues to throw whatever aid and comfort he can there way.