Louis Proyect: The Unrepentant Marxist

August 18, 2012

President Obama and extended unemployment benefits

Filed under: Obama,Social Security,unemployment — louisproyect @ 9:30 pm

My 21-year career at Columbia University was bookended by two bouts of unemployment, the first an outcome of losing a technical writing position at Kidder-Peabody (three years later the firm was liquidated) and the most recent a function of my duties no longer being needed. At the age of 67 becoming redundant is not so bad, especially when you become entitled to severance pay and unemployment benefits.

Back in 1991 it was a real horror show. When you get to be 46 the job hunt becomes far more difficult even for a computer geek. You are too old to be competing with recent computer science grads of Carnegie-Mellon willing to work for half the salary you expect and too young to retire. I used to get up each morning and lie in bed for an hour brooding over my prospects.

Yesterday’s NY Times reported on the gloomy prospects for the middle-aged white-collar unemployed in California:

“A lot of people don’t come here until they’ve spent some time at home licking their wounds,” Ms. Polson said. “By the time they get here, the hardest thing is for them to check their ego at the door. They think they can do it alone. Their pride hasn’t been hurt enough yet.”

But most of the time, that changes rather quickly.

Mr. Reeves lost his job at a distribution company in 2008. He had been laid off once before, a few years earlier, and assumed this time would be just the same — a few weeks of searching before finding a new job. But after two years, he had just one interview. His unemployment checks stopped coming long ago, and food stamps are a part of his life now.

Eventually, he moved into his mother’s home here, where he wakes up most mornings by 6 and walks to the library every weekday. Tuesdays, though, are reserved for the group.

“The only thing I can do is get out of the house and keep looking,” he said. “I can’t allow myself to get lazy, because giving up would just make me more depressed.”

A surprisingly sensitive portrayal of the white-collar unemployed can be found in the 2010 The Company Men that was likely influenced by Death of a Salesman as I pointed out in my review:

In many ways, I could not help but think of Arthur Miller’s Death of a Salesman when watching this film. Miller, a committed Marxist, understood the depths of the illusions that “company men” (salarymen in Japan) had in the system. In that unforgettable scene between Willy Loman and his boss (who I played in a high school production mounted by Fred Madeo, a radical who taught English there), Willy cries out, “You can’t eat the orange and throw the peel away – a man is not a piece of fruit.”

The same kind of scene takes place between Woodward and Salinger, some months after Woodward’s firing. Woodward pleads with his old boss to give him a job as international sales rep at a huge pay cut. Salinger tells him that he is too old and urges him to retire and enjoy days at the beach or playing golf. When Woodward replies that he can’t afford to, Salinger tells him that is too bad. His Board of Directors would not allow him to hire Woodward for the job. A few days later Woodward locks himself in his garage and turns on his engine to commit suicide through carbon monoxide poisoning, the same way that Willy Loman went.

The NY Times article mentioned: “roughly half the group still receives unemployment checks, and many have had multiple extensions to take them to the maximum of 99 weeks. Others were forced off the unemployment rolls this spring, when California did not meet the complex requirements for the extended benefits. Far more will lose their benefits within the next few months.”

After reading this my immediate reaction was to wonder how long my benefits would last. I was assured of 26 weeks but hoped that I could get the extended benefits that would last for another 26 weeks and maybe for the 99 weeks that the Californians would get. It also struck me that for the first time I could begin to see how some people “voted their pocketbook” based on which candidate’s policies were most in their immediate interest. For the average person who believed that Syria was east of Afghanistan and that fracking was a way to cook chicken, becoming unemployed would tend to focus the mind on which candidate was for extended benefits. I had not followed Obama’s statements on this carefully but was under the impression that he favored maintaining the extended benefits and the dirty, filthy Republicans opposed it.

A cursory examination on the Internet revealed that extended benefits would be ending this year so I was shit out of luck. Those dirty, filthy Republicans deserved to rot in hell—not that I could get myself to vote for the slimy occupant of the White House.

Upon further examination I came to the conclusion that all of them should rot in hell. They should create a new layer—the tenth circle of hell—for the lying, conniving, and murderous politicians who have one interest and one interest only: how to screw the 99 percent on behalf of the 1 percent.

In February of this year a deal was struck between the White House and the Republican Party leadership. In exchange for their support of extending the payroll tax cut, the President would agree to terminate extended benefits. The reason he relented on extended benefits epitomize his cynicism and his disregard for the common people foolishly expecting “hope” and “change”.

On February 14th the Christian Science Monitor reported on the backroom deal that brought extended benefits to an end:

“All the parties have agreed to some reduction,” says Pete Davis of Davis Capital Investment Ideas, who watches Congress for Wall Street and is a former tax economist on Capital Hill. “It’s a tough issue.”

The breakthrough came Monday, when the House Republican leadership said it would agree to extend the temporary payroll-tax cut through the end of the year without the need for “pay-fors.” Now, with the resolution on Tuesday of two other issues – the extension of unemployment benefits and extension of the “doc fix” for Medicare – lawmakers can tell their constituents that the legislation can pass without triggering gridlock.

“There is good reason to reach agreement on this early in the election year,” says Mr. Davis. “When you shift from 99 weeks to 79 weeks, you get a big lump of people who drop out of the labor force,” he explains. This results in a lower “headline” unemployment rate – an advantage for an incumbent [emphasis added.]

I am not sure what the business of 79 weeks is about but according to the NY State Department of Labor website, I do not qualify for a single week of extended benefits. Since NY State is a lot more “liberal” than most states, I imagine that 26 weeks will be the limit across the board.

But what is of real interest here is the perception that a lower “headline” unemployment rate will be an advantage for the incumbent. In order words, when people drop out of the labor market, they no longer are counted as part of the unemployed—the so-called “discouraged” job seeker.

In the very month that Obama cut this deal, Cardiff Garcia—a Financial Times blogger produced a graph that took the discouraged into account. When you include them, the unemployment rate is 10.3 percent, not 8.5. That’s about the same as it was in July 1937—for comparison’s sake.

Kevin Drum, who writes for Mother Jones and is a rank apologist for the President (Redundant? Sorry…), tried to explain away the numbers in this graph:

I suppose either measure could make sense depending on what you’re most interested in. There’s probably always a small segment of the labor force that’s only barely interested in working, and that decides to stay home with the kids or write the great American novel given even the slightest incentive.

What a fucking moron, as if people who have left the workforce includes substantial numbers of those who just “decide” to stay at home with the kids or write the great American novel. You can bet that if John McCain had been elected President in 2008 and the unemployment rate is what it is today that the liberal punditry would be screaming about the real unemployment rate.

The other thing worth pointing out is that the payroll tax cut can potentially lead to the underfunding of the Social Security system and hence the likelihood that efforts to “reform” it will grow apace under Obama’s likely second term.

Commondreams, a website that will in all likelihood urge a vote for Obama, pointed out:

Since its inception under President Franklin D. Roosevelt, the Social Security program has been premised on a simple contract: Americans pay into the program’s trust fund over years of paychecks through the payroll tax. In return, when they retire, they receive monthly benefits.

The payroll tax cut changes that. Instead being a protected program with its own stream of funding, Social Security, by taking money from general revenue, becomes more akin to other government initiatives such as Pentagon spending or clean-air regulation — programs that rely on income taxes and political jockeying for support.

“All of a sudden Social Security will have to compete with every other program, whereas before it had its own dedicated revenue,” said Nancy Altman, co-director of Social Security Works, an advocacy group. “It’s breaking the kind of firewall that has always existed between the trust fund and the operating fund.”

She added: “The biggest concern is that this was done without any hearings, without any apparent regard for the impact on Social Security.”

I suppose that all this makes sense in a twisted fashion. After being hailed as potentially the new FDR, Obama is doing everything he can to gut two of the New Deal’s most highly regarded reforms: unemployment insurance and Social Security. Just as it took a Richard Nixon to go to China, it takes a “liberal” to fulfill the historic mission of the Republican Right to dismantle what’s left of the welfare state.

While the unemployment rate is not what it was at the height of the Great Depression (over 25 percent) and while the safety nets are stronger than they were at that time as well, there is nothing more demeaning than to be out of the workforce. The word depression has a greater psychological resonance than recession. It conveys both an economic and personal slump. Fortunately for me, my current status has little of the pain associated with my last bout of unemployment and in Kevin Drum’s terms, I can be described as one who is “barely interested in working.” That being said, I have no interest in “staying home with the kids” since me and the missus have none and are perfectly content having none. Nor does the idea of writing “the great American novel” have any appeal for me, although it did 30 years ago after separating myself from the Socialist Workers Party.

Being unemployed (or being retired) affords me the possibility of deepening my understanding of how this horrible system works and writing poison pen letters to the miserable bastards who rule it. For that, I am not at all depressed and feel rather cheerful, like a tot on Christmas Eve.

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