Business Week reports that President Obama is considering seeking aid for state unemployment insurance programs burdened by debt because of high unemployment rates. At the margin, no complaints here about the idea, but it’s fairly limited in scope and may not make that much of a difference.
The President is likely to encounter a political problem here because his proposed policy may well prevent things from getting worse without actually generating significant gains in employment or the condition of state finances. So he will encounter the same difficulty he experienced when he passed his $800 billion fiscal stimulus bill in 2009: he will be in the invidious position of trying to prove a negative (i.e. “things would have been much worse had we not passed this legislation”). Meanwhile, the GOP will have a field day touting the proposal as yet another instance of “kicking the can down the road” at the expense of far greater debt for our grandchildren.
In an ideal world (you know, the one where Democrats actually had control of both houses of Congress and acted like, well, Democrats, rather than the GOP Lite), there are any number of state aid programs that could take effect instantly and actually do much to generate higher levels of employment. The only prerequisite is the need for the federal government to start making serious investments. A few examples:
1) Start by making sure state and local governments do not lay off workers or cut back on vital programs, which avoids big losses to communities and helps local government to fight the recession.
2) Add emergency revenue sharing to states and cities by picking up increased shares of Medicaid, which has suffered drastic cuts in eligibility and coverage, and enables states to restore benefits to more people, which relieves household budgets.
http://seekingalpha.com/article/251602-why-obama-s-half-measures-won-t-save-the-states