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The economy has shed jobs for the third straight month. Congress must act now to aid those people long unemployed
Published on Tuesday, Apr 08, 2008
On Wednesday, Ben Bernanke told members of Congress that the economy ''could even contract slightly'' in the first half of the year. The chairman of the Federal Reserve Board acknowledged that a ''recession is possible.'' By Friday, the unemployment figures bolstered the case for concern, for the third month in a row the labor market contracting, the sharpest drop in the past five years.
The monthly unemployment rate jumped from 4.8 percent to 5.1 percent. The Bureau of Labor Statistics reported that the economy shed 80,000 jobs in March, and 232,000 in the first quarter. Typically, such a steady pace of job loss reflects a recession.
A recession would come as little surprise in light of the ripple effect of the housing meltdown, all those sour mortgages transformed into securities and spread widely across the economy. Paul O'Neill, a former treasury secretary, shared an apt description of the trouble with the New York Times last week: ''If you have 10 bottles of water, and one bottle has poison in it, and you didn't know which one, you probably wouldn't drink out of any of the 10 bottles.''
That's a formula for a slowdown, to say the least. A New York/CBS News poll found that 81 percent of those recently surveyed view the country on the ''wrong track,'' a significant increase from a year ago.
No wonder Speaker Nancy Pelosi and others, including Hillary Clinton and Barack Obama, called for further action to bolster the sagging economy. John McCain argued almost reflexively for more tax cuts and less regulation. Actually, Congress should press for broader regulation of the altered financial markets, including capital requirements for investment banks and the like. Lawmakers should move more aggressively to rescue those homeowners capable of holding onto their homes — if freed from the latest adjustment upward of their interest rates.
In addressing the growing ranks of unemployed, Congress would do well to start by extending the length of unemployment benefits, something excluded from the recent stimulus package. The Center on Budget and Policy Priorities notes the deepening plight of the long-term unemployed (those looking for a job for more than one-half of a year). On the eve of the 2001 recession, they amounted to 11.1 percent of the jobless. Today the figure is 16.7 percent.
Lengthen the time for receiving benefits, and lawmakers would both aid individuals facing tough circumstances and add vitality to the overall economy. More, the extension would serve as an appropriate acknowledgment that the recovery of recent years hasn't packed the usual punch, many in Northeast Ohio, for instance, failing to regain the financial ground lost in the downturn seven years ago.
Extending unemployment benefits has been part of past responses to a slowing economy. It makes much current sense with the labor market in far worse shape than prior to the last recession. There may be other steps for Congress and the White House to consider. No need to discuss at length the matter of jobless benefits. A reasonable extension should be accomplished now.
On Wednesday, Ben Bernanke told members of Congress that the economy ''could even contract slightly'' in the first half of the year. The chairman of the Federal Reserve Board acknowledged that a ''recession is possible.'' By Friday, the unemployment figures bolstered the case for concern, for the third month in a row the labor market contracting, the sharpest drop in the past five years.
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