Monday, November 07, 2011

No One Could Have Foreseen

All too predictable. Remember the deal at the end of last year that extended the Bush tax cuts for two years, and unemployment benefits for only one? Krugman, 12/9/10:

You may say that economic policy shouldn’t be affected by partisan considerations. But even if you believe that — how’s the weather on your planet? — you have to consider the situation likely to prevail a year from now, as the good parts of the Obama-McConnell deal are about to expire. Wouldn’t there be pressure on Democrats to offer Republicans something, anything, to improve economic prospects for 2012? And wouldn’t that be a recipe for another bad deal?

Surely the answer to both questions is yes. And that means that Mr. Obama is, as I said, paying for the release of some hostages — getting an extension of unemployment benefits and some more stimulus — by giving Republicans new hostages, which they may well use to make new, destructive demands a year from now.

Meet the new hostages, same as the old hostages.

Federal unemployment benefits, which generally kick in after 26 weeks of state-provided benefits, are scheduled to expire at the end of the year. That would be a disaster for many of the estimated 3.5 million Americans who get by on extended benefits — an average of $295 a week. It would also be a blow to the economy, because it would reduce consumer spending by about $50 billion in 2012 — which would mean slower economic growth and 275,000 lost jobs. Unfortunately, given Republicans’ demonstrated willingness to ignore human needs and economic logic, it is more likely than not that jobless benefits will be a major battle in the months ahead.

There are no plausible arguments against an extension — in fact, Congress has never let federal benefits expire when the unemployment rate was higher than 7.2 percent. But there are many specious arguments, chief among them that providing benefits reduces the incentive to get a new job. The evidence says otherwise.

* sigh *

There's a reason why people hate Congress.

We won't even mention the expiration of renewable energy tax credits that currently has the industry in a state of uncertainty, causing some developers to play the wait-and-see game in hopes of an extension, or even cancel some projects because they feel it's not going to happen and they need to make their plans for next year right now.

Awaiting the new list of demands...