Compromise GOP Can Accept

By Dick Morris on January 8, 2014

Published on TheHill.com on January 7, 2014

President Obama’s mission as 2014 starts is simple: He has to distract attention from the healthcare debacle. Healthcare reform isn’t working and won’t work. So he needs to create a diversion.

With his poll numbers lagging around 40 percent, the president naturally wants to stop the erosion of his base, so he is resorting to hot-button class warfare issues to build his support back up.

None has more of a potential political edge than the extension of unemployment benefits.

The Republican Party should not let Obama depict this issue as a heartless caricature of capitalism by giving him a free ride. Yes, the GOP advocates an extension as long as it’s paid for in the budget. Yes, the Democrats are resisting a deal to pay for the extension just to make a political issue. In any case, Republicans cannot afford to be the party of no when it comes to aiding those out of work.

One can only sympathize with GOP concerns that extending benefits in the face of a dropping jobless rate is tantamount to creating a new entitlement, a federal welfare system, to subsidize unemployment.

But the answer is to compromise.

Republicans should look for the answer by treating states differently, depending on their levels of unemployment. While national joblessness averages 7.1 percent, the range among states is enormous. At the low end, North Dakota is blessed with a paltry 2.6 percent unemployment rate, while Rhode Island and Nevada suffer with a rate of 9 percent.

There are 28 states, housing one-third of the nation’s population, with jobless rates of 6.5 percent or below. With unemployment this low, they cannot make a compelling case for extended benefits. But that should not stop the Republicans from extending benefits to states with higher unemployment rates.

The state with rates below the 6.5 percent threshold are the following: North Dakota (2.6); South Dakota (3.6); Nebraska (3.7); Utah (4.3); Hawaii (4.4); Iowa (4.4); Vermont (4.4); Wyoming (4.4); Minnesota (4.6); Kansas (5.1); New Hampshire (5.1); Montana (5.2); Oklahoma (5.4); Virginia (5.4); Idaho (6.1); Missouri (6.1); Texas (6.1); West Virginia (6.1); Alabama (6.2); Louisiana (6.3); Wisconsin (6.3); Florida (6.4); Maine (6.4); Maryland (6.4); New Mexico (6.4); Alaska (6.5); Colorado (6.5); and Delaware (6.5).

The legislation extending the benefits should include a trigger terminating the extension for any state whose jobless rate drops below 6.5 percent, so as the nation recovers from the recession, the 99-week or 52-week unemployment benefit will fade into history.

Most of the politically potent Democratic states are above the 6.5 percent level, however. These include New York, Massachusetts, California, Michigan, Ohio, Pennsylvania, Connecticut, Washington, Oregon, New Jersey and, of course, Nevada.

If Republicans offer benefit extensions to these states, the Senate Democrats could hardly refuse and kill the bill because it won’t extend benefits in Texas or Florida or other red states. The Democrats will huff and puff, but they will have to bow to the will of the House. Their own constituents will demand it. Let the red states fend for themselves, they will insist. Get us the extension we need.

Republicans will then have legislatively reinforced the principle that jobless benefits are primarily for high unemployment periods, where one arguably cannot find work. Once work becomes available, jobless benefits deter employment and drive up wage rates to unaffordable levels. The positive national trend in jobless data will give the Congressional Budget Office a basis for a favorable scoring of the future cost of the compromise.

After all, unemployment insurance is basically a state, not a federal, program. So why should Washington, D.C., set its terms on a one-size-fits-all basis? Economic conditions vary, and so should jobless benefit time periods.

Give the Democrats half a loaf — their half. It will be an offer they can’t refuse.

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