When the big banks were about to go under, Congress was quick to give them all the money they could ever ask for. But now that millions of Americans have been put out of work by the crisis that the big banks caused, Congress can't seem to find the will to throw them a lifeline.
Late last month, as Congress was about to go on vacation for two weeks, Senate Democrats brought up a bill to extend unemployment benefits. The bill was held up by Senator Colburn (R-MD), and since then 200,000 unemployed Americans have seen their unemployment benefits expire with no hope for finding a job in this down economy.
It is true that Republicans blocked quick passage of the bill, but the Democrats didn't set aside enough time to debate it and bring it to a vote. The truth is, both sides were taking the opportunity to play politics with the uninsured - something they wouldn't dare have done to the big banks when they came looking for a bailout.
For the record, the Republicans are wrong for insisting that the extension, which will cost about $9 billion, should be offset. Unemployment benefits, because they put money in the hands of people who are most likely to go out and spend it, not save it, are the single most stimulative form of government spending there is. Taking money out of the stimulus bill to pay for the extension, as the Republicans want to do, would only mean less stimulus funds overall. In this economy, that makes no sense. The unemployment benefits extension will pay for itself several times over by adding fuel to the economy.
Now, it looks like Congress may finally be getting around to passing the bill. The bill will extend Unemployment Benefits to some groups of unemployed until May 5. After that they may extend it again. It's a temporary fix to a long-term structural problem in this country. According to our accounting, $4.6 trillion dollars was handed out the banks in a few months when they needed help, but for the bank's victims, the unemployed, they only get a few billion in aid in fits and starts.
In the short term, Congress should stop playing politics and pass the temporary benefits extension. In the medium term, they should extend benefits to the end of the year for all recipients and add a fifth tier of unemployment insurance for those who have been jobless for more than a year and need help the most.
But for the long term, Congress must get serious about creating jobs. The small tax credit bills and other measures Congress has passed are completely inadequate to seriousness and the depth of the problem with 30 million unemployed or underemployed. Has anyone noticed the $1 trillion in excess bank reserves now parked at the Federal Reserve because banks are hoarding their money? An appropriate level of bank reserves should be set aside and the excess funds should be forced out onto the street in the form of credit to small businesses. This would put Wall Street to work rebuilding Main Street in a serious fashion.