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Unemployment-benefits program threatened by 'jobless recoveries'

October 19, 2010 - Mike Maneval
Reporting by John Maggs at on Tuesday explains concerns about the unemployment benefits system.

Maggs' examination indicates the program's troubles date to the 1991 recession. The system, Maggs says, "revenue builds up in the good times and is drawn down in bad. The federal government makes up for any temporary shortfall in a bad recession, with loans to the states that have typically been paid back quickly when surpluses return during economic recoveries."

But after the "jobless recoveries" of 1991 and 2001, the taxes paid by employees and employers failed to close the gap, despite the program's benefits falling to the pressures of inflation and the system's increasingly antiquated stipulations for what counts as work, stipulations which leave people who are left stitching part-time jobs into their income or who relocate to seek better opportunities out in the cold. Washington state Democrat Jim McDermott, who represents Seattle in the U.S. House, has pursued reforms to the system for years and faults the Obama administration for not fighting for reforms more aggressively. McDermott also is pessimistic the bipartisanship he feels is needed to advance the issue can be achieved in today's political climate.

One might also ask what role bipartisanship played in the past 20 years of policy. Bipartisan "accomplishments" like NAFTA and permanent normal trade relations with China have helped shift emphasis in policy from the working middle-class to investors and money-lending. The subsequent stagnation in compensation has left consumers with less and less to spend, so while stock and commodities trade well, consumption rates - the principal factor in job creation - fail to stimulate new production and services. It all leads America into the cycle of "jobless recoveries" in which we're still mired - 9.6 percent unemployment under the lower tax rates signed by President George W. Bush and expanded and extended tax credits in the stimulus signed by President Barack Obama - in the first place.


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