Failure to Extend Unemployment Benefits Reveals Impasse of the US State

Since the summer of 2007, the United States federal government has extended benefits under the Emergency Unemployment Compensation (EUC) program to unprecedented levels amidst the most serious unemployment crisis the nation has experienced since the great depression of the 1930s. As a result of the collapse of the housing bubble in 2007 and subsequent Wall Street meltdown the following year, official unemployment in the United States has stubbornly hovered around 10 percent.[1]

Under current provisions of the emergency extension, unemployed workers in states with the highest unemployment levels are eligible for up to 99 weeks of benefits, including their regular state benefits, EUC and separate Extended Benefits program. During both the late Bush administration and the new Obama presidency, ensuring federal funding for extended unemployment benefits was considered the cornerstone of economic recovery and stimulus in a broad Keynesian policy of attempting to prop up consumer demand through government spending. As any good Keynesian would tell you, unemployment benefits are among the best stimulus tools available, as unemployed workers generally spend their benefits right away in the local economy rather than stashing them away as savings. From the middle of 2007 to about midway through 2009, the American bourgeoisie was more or less united, across partisan lines, on extending unemployment benefits as an appropriate measure to respond to an economy all regarded as in deep recession. The goal of this policy was to prop up consumer demand and convince an increasingly frightened and cynical public that the state cares about workers who were unfortunate enough to lose their jobs due to the malfeasance of the banks and “irresponsible homeowners.”

Fast forward to the summer of 2010: Official unemployment has barely dropped at 9.5 percent[2], the average length of unemployment is now a stunning 34 weeks (more than the 26 weeks of unemployment benefits available under regular state programs) and hundreds of thousands of workers have already exhausted all the benefits for which they are eligible under the federal extensions, leading to the coining of a new term on the unemployment internet message boards—the “99 weeker.”[3] However, now—unlike the previous two years—the political consensus for further unemployment extensions in Washington has evaporated. For the last six months, Democrats and Republicans have been going at one another over the twin threats of the national debt and a possible double dip recession, using the plight of the unemployed and the further extension of unemployment benefits as ideological clubs.

According to the Republican line, the unprecedented extension of unemployment benefits has only served to subsidize unemployment by giving the long term unemployed an incentive to veg out and skip looking for work, at the same time that it has contributed to a swelling national debt that threatens the long term health of the national economy. Meanwhile, Democrats berate the cruelty of their Republican foes who want to turn their back on the nation’s unemployed by cutting off their benefit checks, simultaneously threatening economic recovery by stifling consumer spending, ultimately risking a new round of home foreclosures—leading to a double dip recession.

This debate has played itself out in high drama several times over the past sixth months in the U.S. Senate, with that body only agreeing to a series of last minute compromise emergency benefit extensions just as previous extensions were set to expire threatening to cut off the flow of unemployment benefit checks. However, this pattern has now come to a screeching halt with Republicans putting up a supposedly principled fight to filibuster any further benefit extensions citing their concerns about the spiraling national deficit. Since June 2nd, workers have been unable to advance to any new tiers of unemployed benefits as Republican Senators have stubbornly refused to approve any new extensions that aren’t “paid for.” As this article goes to press, the Senate has just rejected a series of bills that would have extended unemployment benefits until November and has now gone home for the July 4th recess without approving any extensions.[4] As a result of the Senate’s inaction, the National Employment Law Project (NELP) now estimates that 3.2 million unemployed workers will see their benefits cut off over the next month. [5]

So what is behind this abrupt change in policy for the American bourgeoisie? How should unemployed workers—and indeed the entire working class given that in the midst of this crisis even those of us with a job could be without it at a moment’s notice—interpret the debate over the unemployment benefits extension that has seemingly pitted Democrats against Republicans over the last several months? Are Democrats really looking out for us against the cruel heartless Republicans? Is the rhetoric about the national debt just political posturing and an ideological ploy to convince workers to accept “inevitable austerity”?

Debt crisis fuels austerity plans

The Republican Party’s actions—and certainly its rhetoric—in blocking the further extension of unemployment benefits do reveal that in fact the Grand Old Party now regroups some of the most ideologically driven right-wing factions of the bourgeoisie. Under the influence of the Tea Party, the Republican party has become home to all types of right-wing ideologues who really seem to believe their own rhetoric about the unemployed being lazy free loaders, and who would—if they had their way—abolish whatever remains of American state capitalism’s social “safety net” immediately, regardless of the effects on the wider economy and society. For these Republicans—and their Tea Party allies—unemployment insurance is nothing more than an unfair subsidy to the lazy and inept paid for out of the tax proceeds extracted from hard working Americans, most notably the small businessmen that supposedly form the backbone of American society in their idyllic vision of the shopkeeper’s utopia.[6]

The fact that American politics is capable of producing a bourgeois faction with considerable sway within one of the two major political parties, operating with such an ideological view of the world, is clear evidence of the accelerating decomposition of the American state, in which important factions of the bourgeoisie have simply lost the capacity to strategize in the interests of the national capital itself, but instead take their orders from naked ideologues and demagogues concerned only with short-term partisan interest. In the short to medium term, the Republican Party’s action in blocking the further extension of unemployment benefits compromises the position of the national state to address the immediate needs of the total national capital to prop up demand, shore up local economies and ward off the danger of a double dip recession.[7] Moreover, in acting to cut off the benefits of so many unemployed workers in one fell swoop at the national level, the Republicans’ actions threaten to alienate an entire swathe of workers who have now been introduced to the brutality of the American state in the most direct way possible: the immediate cutting off of the measly unemployment benefit checks that have so far just barely kept them and their families from foreclosure, eviction, bankruptcy and even homelessness. [8]

Nevertheless, despite the apparent short-term inanity of the Republican position on unemployment benefit extensions—and while we can debate whether their concern over the growing national deficit is genuine or merely staged for short term partisan goals—the underlying debt problem is in fact very real for the American bourgeoisie. A growing consensus is in fact emerging among the entire bourgeoisie that the national debt cannot be allowed to continue to grow out of control and that national austerity is in the offing. It is in this context that even some Democrats have started to come around to the Republican position on unemployment extensions: they are just too costly.[9] Let us workers not forget that it was actually a Democrat—Senator Ben Nelson from Nebraska—who cast the deciding ‘No’ vote on the latest extension bill, ensuring that over 3 million of our unemployed brethren will lose benefits in the weeks ahead, baring a dramatic change of course following the July 4th recess.[10] Moreover, on the eve of the latest vote on the extension, the Majority leader in the House of Representatives, Steny Hoyer of Maryland, gave a foreboding address to the Third Way—a supposedly centrist Washington think-tank—laying out the growing consensus of concern about the spiraling national debt, which he said would make further extensions of unemployment benefits difficult, if not impossible.

At the end of the day, workers must recognize the simple fact that, regardless of ideological and partisan commitments, the bourgeoisie is in the last instance always driven by the cold hard logic of the state and capital. With the failure of the ‘expansionist’ policies to jolt-start a sustained recovery, and with the debt-crisis in Europe threatening to destabilize the whole capitalist system, this logic at the present juncture more and more dictates austerity over Keynesianism[11]. Simply put, whether it is run by Democrats or Republicans, the state cannot continue to extend unemployment benefits forever. Whether they cut us off after Tier 4, Tier 5 or Tier 8,[12] the state will eventually have to respond to the dictates of capital and phase out further benefit extensions for long-term unemployed workers. Whether gradually, or in one fell swoop—if the most retrograde factions of the Republican Party have their way—millions of our working class brothers and sisters will face the reality of being permanently sidelined from the official labor market and forced to make a living through other means.

Workers Must Reject Calls to Defend the State

Whatever the motivations of the Republican Party, its rhetoric over the last several months—egged on by conservative talk radio, Fox News and Tea Party activists—has clearly been designed to drive a wedge between workers who still have jobs and the unemployed. They want to paint the unemployed as lazy freeloaders who do not really want to work and who just want to live on the government dole—in other words, off of the labor of other workers extracted as taxes. As frightening, and as completely wrong, as this ideology is, workers must not fall for the opposite side of the coin as Democrats execute the classic ideological division of labor by painting the state as the generous provider of benefits that helps the unfortunate through tough economic times. This side of the ideological coin is clearly designed to trap workers behind a defense of the state as the protector of the values of social solidarity, epitomized by unemployment insurance.

Workers must be clear about this unemployment insurance system that the bourgeois left want us to defend. Unemployment insurance in the United States was never meant to be permanent. In “non-emergency” conditions regular state benefits only last for 26 weeks. Moreover, only a fraction of unemployed workers actually meet the very strict eligibility requirements to qualify for unemployment benefits, which generally hinges on complex monetary formulae designed to establish a workers’ “long-term connection” to the labor market. Most unemployed workers receive no benefits whatsoever. In addition, even unemployed workers who may be technically eligible for benefits are often denied on dubious grounds and lose subsequent appeal hearings, which they do not understand and in which the rules of a court of law apply. And for those who do qualify for benefits? They generally receive only fraction of their pay while they were working—amounts that often do not even allow recipients to keep their heads above water anyway.  Is this the epitome of social solidarity? Hardly! Is this system an overly generous subsidy that gives workers an incentive to milk the dole? Not even close!  In the minutiae of its eligibility and procedural rules and the paltry benefits it provides, the capitalist state’s unemployment insurance system is revealed for what it really is: an arbitrary, bureaucratic monstrosity designed to pacify the working class at the least cost possible for the state and employers.

Workers must not fall for either side of the bourgeois ideological coin when it comes to the debate regarding the extension of unemployment benefits. Those of us who are lucky enough to remain employed in the midst of this unprecedented crisis must not be baited into attacking our class brothers and sisters who have been forced to utilize the unemployment insurance system to eek out a subsistence living. On the other side, unemployed workers must not fall for the trap of looking to the state for our salvation. We waste our time when we stay up late at night watching C-SPAN[13], following the progress of each unemployment insurance extension bill as it winds its way through the tortured halls of Congress. We dilute our real class anger when we allow ourselves to be mobilized behind email and telephone campaigns to Congressional offices, imploring members of Congress to extend benefits just one more time.  All this will do is increase our anxiety and demoralize us even more when the eventual final cut-off comes. We must recognize that our struggle, if it is to be successful, must confront the state, rather than beg for the pittances bourgeois legalism might or might not grant. How much longer will we accept seeing our lives, our very well-being reduced to a pawn in a cruel, calculated, heartless political game between bourgeois factions, all with the same ultimate prerogative to enact austerity?

Only the path of class struggle on our own class terrain, through our autonomous class organs can unite the employed and unemployed and challenge the very society which produces the want, poverty, anxiety and desperation which currently grips our class. While the bourgeoisie will seek to divide the working class amongst itself, the increasingly harsh and full-frontal attacks on living and working conditions by the state will provide the fertile ground for struggles to develop where workers will be able to express their solidarity with the unemployed and rediscover their historic class identity. Only the road of struggle can provide the antidote to despair.

--Henk

07/02/2010

 

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[1] The ICC has in numerous previous articles explained that the bourgeoisie’s official unemployment numbers grossly underestimates the real extent and social impact of joblessness.

[2] According the official job numbers released on Friday July 2nd, the unemployment rate has fallen to 9.5 percent from a previous 9.7 percent. However, even bourgeois economists were forced to admit that this drop was due largely to discouraged long-term unemployed workers simply giving up looking for a job. See “Economy lags as job growth remains weak ” in the Washington Post, Saturday, July 3rd, 2010. 

[3] See unemployed-friends.forumotion.com, an internet message board for unemployed workers, where the discussions have been dominated for months by the anxious hoping for additional tiers of benefits.

[4] To be accurate, the proposed extension of benefits would not have made any workers who had already exhausted their 99 weeks (or all the tiers they were eligible for) eligible for any additional benefits. It would only have allowed workers to continue to advance to the next tier of emergency benefits until November.

[5] To put it another way, the number of unemployed workers in the United States who could potentially lose their benefits over the next month is about equivalent to the population of Uruguay.

[6] This is of course beside the fact that the Republican Party is largely bankrolled by corporate America and the Tea Party is in many ways the brainchild of millionaire anti-tax activists.

[7] Another ominous motive for the Republican’s stand against unemployment benefit extensions was given by the Nobel prize winning left-of-center economist Paul Krugman on the “Charlie Rose Show” of 7/02/2010. He referred to the ‘Theory of pain’ which goes that forcing pain on people now, even though it is not immediately necessary in the short term, not only reassures the bond markets that governments are serious about addressing the deficits, but also conditions the populace for more substantial pain in the future when the growing deficit makes even deeper universal cuts inescapable. See charlierose.com.

[8] If Congress does not enact an extension package when it returns from the July 4th recess, it will mark the first time in history federal EUC programs have been allowed to expire with the official unemployment rate still above 8 percent.

[9] It was with some considerable awkwardness that President Obama attempted to mount a meek defense of continued Keynesian stimulus at the G20 in Toronto in the midst of a growing international consensus for austerity made necessary by the so-called sovereign debt crisis in Europe, Japan and elsewhere. At the very least, Obama must not have come off as very convincing to his fellow world leaders as he called for continued stimulus abroad, just as his own Congress coldly rejected further unemployment insurance extensions at home citing the spiraling national debt.

[10] Granted a number of bourgeois commentators expect that an additional extension will eventually pass once the Senate reconvenes after the July 4th recess and a replacement for the late Democratic Senator—and one time Ku Klux Klan member—Robert Byrd from West Virginia can be seated and provide the deciding vote. However, even if another extension does in fact pass this does not change the fundamental dilemma facing American state capitalism, which will eventually necessitate a final termination of benefit extensions.

[11] See ‘Debt-Crisis: The State Is Bankrupt, Workers Must not Bail it Out ’, Internationalism, no. 155.

 

[12] Discussions on unemployed-friends.forumotion.com have been dominated by pleas for a Tier 5 of benefits for months (the current EUC program ends after Tier 4). While such a demand may eventually broaden into a confrontation with the state itself, the tone of the discussions so far have unfortunately remained mired in bourgeois legalism.

[13] C-SPAN is the U.S. cable news network that provides live feeds of the proceedings on the floor of Congress.