Maine’s senators, Olympia Snowe and Susan Collins, are to be commended for breaking with the Republican Party and supporting a needed extension of unemployment benefits. Unfortunately, none of their colleagues followed their lead, and a bill to keep the benefits going was defeated in the Senate before lawmakers left Washington for the July 4 holiday.
Republicans and Democrat Ben Nelson of Nebraska object to the cost of the extension, saying it will add to the growing national deficit. The burgeoning deficit is surely a concern, but so is the possibility that the sluggish economic recovery will stall.
The U.S. economy is heavily dependent on consumer spending. With unemployment still hovering near 10 percent and consumer confidence barely above 50 percent, it is clear that attention needs to be focused on this sector of the economy.
Extending unemployment benefits is one way to do this. When someone loses their job, they cut back on spending. Unemployment benefits ease this by ensuring that households continue to receive payments, to pay their bills, buy groceries — all of which help buoy the economy.
Without such spending the economy could slip back into recession, which would be much worse for the national deficit.
Sen. Snowe understood this and rightly criticized her colleagues for helping other groups, but not working-class Americans who happened to lose their jobs. “Regrettably, today politics trumped policy and the Senate turned a blind eye to its responsibility to provide hardworking American families with adequate resources to weather these tough economic times,” she said after Wednesday’s Senate vote. “We were able to do it for the doctors, why couldn’t we do it for the unemployed?”
Last month, Congress passed a bill to delay for six months a cut in Medicare reimbursements to doctors. The cuts were part of a 1990s budget-cutting law that has been largely ignored.
The so-called “doctor fix” had been part of a larger bill that included the unemployment benefit extension and increased Medicaid payments to the states. The larger bill, which included provisions to close tax loopholes to pay for the other measures, was defeated in the Senate three times. It was then broken into pieces. The unemployment provision fell one vote short of passage, a vote that likely would have come from Sen. Robert Byrd, who died Monday.
In addition to leaving 2 million workers without unemployment benefits, Congress left states scrambling to fill budget gaps left when the expected higher Medicaid payments weren’t approved.
Maine lawmakers took a risk and counted on $85 million in federal funding under the Medicaid Federal Medical Assistance Percentage, or FMAP. It seemed like a safe gamble because the payments had been approved by the House and Senate earlier this year. Again citing deficit concerns, Republican lawmakers backed away from the support of higher FMAP payments. Without the federal money, states including Maine will have to trim their budgets, which means laying off people, further depressing consumer spending and weakening the economy — leading to higher deficits.
When senators return on July 12, passing a bill to extend unemployment benefits must be a top priority. Then, they can turn their attention to FMAP.