I've seen a few comments lately reminding folks that unemployment benefits will expire and this will harm as many as 2 million people and the economy overall. These comments suggest negotiating with the Republicans for an extension of those benefits. My general response to those comments is yes, we do need to extend those benefits, but what will you give up to the Republicans for an extension? Extend the Bush tax cuts for the wealthy? How about an increase in the Medicare age? It's going to cost and cost dearly to make any deal with the House Republicans.
Because of this, I've generally favored going down the bunny slope in January. No deal may be the best deal overall, and Rs will be under tremendous pressure in January to pass a middle class tax cut and make a deal.
Today, Jamie Boulle for The Plum Line (WaPo) makes an excellent point regarding an extension of the unemployment benefits: going over the "cliff" may be the only way to get them extended.
First, why this is so important. In addition to the human cost for those two million people, this will harm the nascent economic recovery for all people:
Earlier this month, the Economic Policy Institute found that the economy would save 400,000 jobs if unemployment benefits were extended through 2013.Jamie Boulle for The Plum Line (WaPo)
But how to we get them extended without harming the economy in a different way by adopting Republican attempts to destroy Medicare or Medicaid? Go down the bunny slope! Let the tradmed freak out and the pundits squeal. Let the Wall Streeters get scared. Let defense contractors freak out.
If we do go over the cliff, Republicans will end up with even less leverage than they have now. Right now, any leverage Republicans have is contingent on the fact that there’s a time limit — if the administration wants a deal before the end of the year, that gives Republicans a bit of a boost in the negotiations. If Obama is willing to over the cliff, and tax rates go up, Republicans lose their leverage. Republicans will suddenly be in need of something — a new compromise tax rate for the rich that is slightly lower than the Clinton-era rates that will have automatically kicked in — that only Obama can agree to.Jamie Boulle for The Plum Line (WaPo)
Going over the cliff would strengthen the administration’s hand. Obama could then negotiate a far better deal for the economy — one that includes an extension of unemployment benefits. All we need now is for the administration or Senate Democrats to start talking about them.
Going down the bunny slope may be the only way.