The news Friday of the highest unemployment rate in 26 years fueled a lot of stories and columns about the need for a 2nd economic stimulus package or the more politically realistic idea of extending some parts of the 1st stimulus. For example, The Wall Street Journal’s Jonathan Weisman and John D. McKinnon reported Saturday:
White House officials and Democratic leaders in Congress on Friday said they were weighing extending key elements of the economic-stimulus program as the nation grapples with a deteriorating job market.
Obama administration economists said they would like the enhanced unemployment-insurance program to extend beyond its Dec. 31 expiration date. They also want to maintain a program that offers tax credits to pay 65% of the cost of health insurance policies under the COBRA program, which allows laid-off workers to purchase the health plans they had through their previous employer.
White House officials said they also are examining whether to extend a soon-to-expire tax credit for first-time homebuyers, but that provision faces a stiffer headwind.
I’m unabashedly in agreement with basically every economist in the world that the stimulus does more good (retaining and creating jobs, spurring consumer spending, cutting taxes) than bad (running up the national debt) and that there needs to be more stimulus. But unless the U.S. Senate suddenly starts to writes legislation that prioritizes the national interest, we’re not going to get a 2nd stimulus. So Barack Obama and pro-stimulus Democrats need to prioritize what’s worth fighting for: Extending unemployment benefits and COBRA are worth a fight — they help people most impacted by the recession, i.e. those that lost their jobs.
Extending tax credits to new homeowners, though, is another animal. It continues the questionable practice of the federal government actively encouraging people to jump into home ownership. And the New York Times reported two weeks ago that the program often helps the already well off, who have the good fortune of buying a home when the government has an $8,000 line of home buyer credit. Lobbyists at the National Association of Realtors are the most enthusiastic backers of the home buyers tax credit. That doesn’t mean necessarily mean it’s bad. But the focus should be on programs that most directly respond to the recession’s impact.