Before it adjourned for its Memorial Day recess, the House of Representatives passed a scaled down tax extenders bill, that didn’t include extensions of COBRA health insurance subsidies for unemployed workers, or an extension of FMAP funding to help states meet their Medicaid responsibilities. The bill also only extended unemployment benefits through November, instead of December as had been originally planned.
Despite 9.7 percent unemployment, and long-term unemployment at record highs, the bill was cut down because of concerns regarding its effect on the deficit, as only part of it was offset by revenue raisers. A group of Blue Dogs and freshman Democrats, as well as lockstep Republican opposition, helped to produce legislation with significantly less impact.
Today, The Wonk Room posed a couple of questions regarding such deficit hysteria to AFL-CIO President Richard Trumka, who appeared at the America’s Future Now conference to advocate more robust job creation measures from Congress. Trumka said that those more concerned with the deficit than the fact that 15 million Americans are currently out of work have “been reading too much fiction or they have their head in the sand”:
We do not have a short-term deficit crisis, we have a short-term jobs crisis in this country. And anyone that doesn’t believe that has either, I think, been reading too much fiction or they have their head in the sand. Every economist I know says we have a jobs crisis, and yet the people on [Capitol] Hill say we can’t really fix the crisis, we have to worry about deficit reduction.
Later on, when ThinkProgress asked why Washington is so focused on deficits when the country is much more concerned with unemployment, Trumka blamed “timid leadership.” “Timid leadership gets any kind of pushback, they say we’ll stop. What they need to do is stand up and explain that if you really want to cure deficits, put people back to work,” he said.
It’s true that short-term concern over the deficit and favoring deficit reduction over job creation is counterproductive. As CAP’s Michael Ettlinger and Michael Linden wrote, in the face of the Great Recession, short-term deficits “are both inevitable and highly appropriate at a time when the economy is weak.”
It should also be noted that, according to a recent NBC News/Wall Street Journal Poll, Americans do not prioritize deficit reduction over job creation. Only 5 percent of respondents to the poll cited it as their top concern, while 35 percent said job creation is the most important policy priority of theirs.