Obama’s good idea
The following editorial appears on Bloomberg View. President
Barack Obama’s final budget has just been released, and it’s going nowhere. The House and Senate budget committees say they won’t even bother to question the president’s budget director on the plan.
That’s a shame because the new proposal has ideas worth examining, and some deserving of bipartisan support. One especially is worth a look: so-called wage insurance.
The idea is to temporarily support the income of workers who end a spell of unemployment by taking a job for less than they were previously paid. On the administration’s plan, they’d get a subsidy equal to half of the difference in pay, capped at $10,000 over two years. The new job must pay less than $50,000 a year, and the worker must have been in the previous one for at least three years.
This notion isn’t new. The long-standing Trade Adjustment Assistance program has a similar provision, introduced in 2002 by the George W. Bush administration, but that program is far less ambitious. It applies only to people age 50 or older, and only to those who’ve lost their jobs because of foreign competition.
What’s the difference whether you lose your job because of surging imports, advancing technology, changing businesses methods or shifts in consumers’ tastes?
None at all. Trade adjustment assistance should be broadened into economic adjustment assistance. Encouraging the jobless to get back to work helps the economy as a whole, and as part of that larger effort, some temporary help in coping with a pay cut seems reasonable for those on low and moderate incomes.
The administration says its wage insurance plan would be part of a “cost-neutral suite of reforms” to the wider unemployment insurance system. It projects an eventual cost of roughly $1.5 billion a year for the wage insurance piece, with the money for that and other changes coming from higher taxes. The cost could be higher, depending on the details and how popular it is (which is guesswork). The policy wouldn’t come for free — but a welldesigned program would be worth the outlay.
Practically speaking, the president’s budget may well be irrelevant. But that’s no reason to consign its good ideas to oblivion without further examination. After all, it’s not as if Congress has better things to do with its time.