The desperate unemployed
by digby
… after suffering appropriately by being forced to anticipate the worst, may be getting some relief. If everything goes without a hitch:
With jobless aid poised to expire for 1.3 million Americans this weekend, a bipartisan team of senators is proposing a short-term extension of unemployment benefits that will come to the floor as soon as Congress returns in January 2014.
Sens. Jack Reed, a Rhode Island Democrat, and Dean Heller, a Nevada Republican, are proposing a bill that would extend unemployment benefits for three months.
“To cut it off this way is both wrong from a principle, what we should stand for as a nation, and from a very sound, practical economic perspective,” Reed said on a Thursday conference call.
The $6 billion proposal proposes to maintain aid for the long-term unemployed, who would have their benefits restored retroactively, while buying legislators more time to work out a longer extension. The legislation is expected to come to the Senate floor on Jan. 6, Reed said.
It sounds more and more as if the least insane Republicans have belatedly realized that cutting off these benefits will hurt them politically and hurt the recovery economically. And it means the Democrats have rubbed the sleep from their eyes and (once more) realized that their friends the Republicans are just as cruel and stupid as they seem.
Most Republicans oppose the extension of federal benefits—which kick in after state jobless aid expires—arguing that they increase dependency on the government and are unnecessary since the job market has improved .”Does it make sense for our country to borrow money from China to give it to the unemployed in America? That is weakening us as a country,” Sen. Rand Paul told NBC News.
Oh my God. Once more with feeling, folks:
[I]t does not matter who owns the public debt, because its repayment places absolutely no budgetary burden on anyone. It might take a minute or two out of the day of some operations person at the Fed, but that’s all. That person might bring up the spreadsheet of a Chinese bank’s savings account at the Fed (its “Treasury securities” account) and deduct a certain amount, by a keystroke, thereupon to bring up that same bank’s checking (“reserve”) account spreadsheet and add that same amount, by a second keystroke. The debt is thereby paid. Ta-da!
No one sees a tax increase. No one’s stuff is dispossessed by Chinese soldiers. No Shanghai Shylock turns up demanding pounds of American flesh. There definitely isn’t slavery. As a matter of fact, no one except people working in finance is ever aware that it is happening.
It’s intuitive but wrong to picture the public debt as private debt we’re all on the hook for. In reality, public debt isn’t really properly thought of as borrowing at all, according to Frank N. Newman, former deputy secretary of the U.S. Treasury under President Clinton. Since the U.S. doesn’t need to borrow back the dollars it originally spent into existence in order to spend them again, the purpose of issuing Treasuries is really just for “providing an opportunity for investors to move funds from risky banks to safe and liquid treasuries,” he writes. Investors aren’t doing the U.S. a favor by buying treasury securities; the U.S. is doing investors a favor by selling them. Otherwise, without the option “to place their funds in the safest most liquid form of instrument there is for U.S. dollars,” would-be bondholders “are stuck keeping some of their funds in banks, with bank risk.”
The reason China owns all those safe securities is that because the U.S. purchases all those Chinese-made commodities for U.S. dollars. China converts the dollars into the dollars’ interest-bearing siblings, bonds, and park them at the Fed until they mature – that is, when the spreadsheet switcheroo ceremoniously retires the debt. At this point, China usually just rolls over the debt by purchasing new securities. This keeps Chinese currency weak against the dollar, so China can have the U.S.’s export market – this is the “currency manipulation” you’ve heard self-righteous pontification about.
What does the U.S. get out of this arrangement? IPhones for which it exchanges digital entries in a spreadsheet at the Fed. What does China get? An extremely productive economy, for one thing.
Rand Paul has a big following. A lot of people think he makes sense. And he doesn’t make sense. But then neither do the rest of our leaders of both parties who evoke your household budget when explaining the economy and bring up “China” as if they are somehow in a position to “pull the plug” and then all hell will break loose. It’s facile, lazy political rhetoric on all sides and it’s dangerous.
There is only one thing to be said about something like Unemployment Insurance: we don’t have enough jobs for the people who want to work. We must help them through this time because we are a decent, wealthy society and there but for the grace of God (or a bad streak of luck) go any of us. The end, goodbye.
