Unemployment Insurance: the Quick Fix and the Long Haul
President Obama wants the recovery package to both provide fast-acting stimulus to the faltering economy and set the nation on a new course for the future. And while conservatives (and even some misguided mainstream news sources) have bemoaned what appears to be the long-term nature of some provisions, the reality is that most of the more protracted measures will produce a substantial short-term impact as well. In other words, short-term stimulus and enduring reform are not mutually exclusive.
One provision that exemplifies the combination of short- and long-term effects is the Unemployment Insurance Modernization Act, which was included in the stimulus measure that passed the House and has strong support from President Obama. As I’ve pointed out repeatedly unemployment benefits are one of the most effective and efficient means of stimulating the economy. The problem is that they simply don’t reach enough people: today only 37 percent of unemployed workers qualify for benefits. As my colleague Harry Moroz discussed in his post last week, the Unemployment Insurance Modernization Act would help to change that, encouraging states to modernize their unemployment systems so that more part-time and low-wage workers would become eligible.
In the short term, more unemployed Americans can sign up for the benefits they need, spending the money quickly to support their families and powerfully stimulating the economy in the process. In addition, the states that make the reforms will also have better, more comprehensive unemployment insurance systems going forward. And that, as Andrea Batista Schlesinger and I argue in the new book Thinking Big: Progressive Ideas for a New Era, will provide a long-standing safety net for America’s current and aspiring middle class. After all, families are thrown into turmoil by job loss even when the overall economy is doing well.