Tax Cuts and Unemployment
Floor Speech
Mr. DURBIN. Mr. President, we are all in the holiday spirit, at least partially, knowing that our families and the people we love are waiting for us back home and around the country to celebrate this once-a-year holiday occurrence. But we know we can't leave. We can't leave Washington until we get our job done.
The job we have to do is to be mindful of important measures that need to be enacted into law before any of us can leave this town with a clear conscience. One is the payroll tax. Currently, those working--160 million Americans--get a 2-percent reduction in the payroll tax every pay period. For the average family in Illinois--making about $53,000 a year--the amount that payroll tax deduction has been calculated to be is somewhere in the range of $1,000 a year. Now, that means about $100 a month for families who are working and enjoying this payroll tax cut.
I know what is happening with that money. It is being spent, and spent quickly, by many working families who have a job but are struggling from paycheck to paycheck. If gasoline prices go up, if utility bills are higher than expected, then the amount they thought they had put away as a reserve quickly vanishes. Particularly at the holiday season, when kids need warm clothes, when they need to keep the house warm for the family, and they are trying to put a few things under the Christmas tree, that $100 is more than just a small amount. It could mean a lot to a family, and it is going to expire. On January 1 it goes away.
As of January 1, these working families will see their paychecks reduced by about $100 a month, on average. Now, Members of Congress--Members of the Senate--may not feel that, but a lot of working families will. We cannot leave Washington in good conscience without extending the payroll tax cut.
President Obama has been talking about this for 3 months. He has taken his case to the American people--first to Congress then to the American people. He has gone from State to State, community to community, and identified what this payroll tax cut means to individual families. Then he has spoken to America and said it is more than just being compassionate to those who are struggling, it is an important part of restoring economic growth in America. Money that is given in payroll tax cuts to working families is spent and respent in salaries for those who work at the shops and businesses that provide goods and services where working families do their work.
So the payroll tax cut is more than helpful to individual families; it is good for the overall economy to reduce our unemployment. That is why we cannot leave without enacting it. We have come up with what I consider to be a responsible, thoughtful way to pay for it. We impose a surtax on those making over $1 million a year, but we exempt the first $1 million in income they receive.
So if a person is being paid $20,000 a week--that is what a millionaire would make each year--their taxes don't go up. But for the next $1 million they make, there is a surtax of a few percentage points. I think that is reasonable. I think people who are comfortable and well off and, frankly, lucky to be living in this country should be willing to sacrifice a little to help working families.
We could only find one Republican Senator who would join us in this effort to put a higher tax on the wealthiest in America to help working families across America--only one. We need more. It takes 60 votes in the Senate.
We have a nominal majority in the Senate on the Democratic side with 53, but it takes 60 to do anything of great controversy, and this is one that is controversial. We could only get Senator Collins of Maine who would step over and join us in this bipartisan effort. We are searching for other ways to do this, with the understanding that it has to be done. The payroll tax cut has to be done.
But let me say there is another part to this that I think is equally important; that is, maintaining unemployment benefits for the millions across America who are out of work. This recession has gone on for a long period of time. People are unemployed for longer periods than they ever imagined. In fact, there are four unemployed people for every available job.
As I visit the centers where people are struggling to make their resumes more timely and to respond to classified ads and requests from those who would like to hire, I find these people working day in and day out in an effort to try to find a job. They are serious about it.
Those who would dismiss them and say, as long as they are receiving unemployment benefits, they are going to be too lazy to look don't know what that life is like. They do not understand what these people go through.
When I meet with unemployed people who have been out of work for some period of time, the first question I ask is, What has happened to your health insurance? Overwhelmingly, the answer is, Gone; no health insurance protection for my family because I lost my job, and my job brought me my health insurance protection. That is the reality.
When I saw the bill that came over from the Republican side this week, it troubled me. There are two provisions in there that I think are mindless and, frankly, don't reflect the reality of what people face in this recession. One of them would authorize the States to give drug tests to people who are unemployed before they can get unemployment benefits.
Is there a notion somewhere that people are not applying for work because they are addicted to drugs? I haven't seen any evidence of that. This plays into the thought process these people aren't really trying because they do not want to try. I don't buy that. I think that kind of attitude reflects the fact that those who support it and sponsor it never sit down to talk to these people and to their families and understand what they are going through.
There is an element that I think hasn't been spoken of much but should be. What happens to a family when the major breadwinner is out of work for 3 months, 6 months, a year or more? It turns out that some of the problems may not be anticipated by some Members of Congress or the Senate that should be.
I received a letter from Lanesia Hoskins, wife and mother of three, from the south side of Chicago. She wrote that her husband Theodis Hoskins, who has a college degree, had been out of work for more than 2 years. His unemployment insurance had run out, and Mrs. Hoskins had just started a second job to help support their family. She wrote, ``My body is tired and I often feel weak.''
This is how Mrs. Hoskins described her husband's job search in an economy where there are still five job seekers for every available job:
My husband has stood in long lines at the job fairs located at Chicago State University, St. Sabina Church, and for the Ford plant in Chicago. He has stood out in these hot lines just to have people inside the building take his resume and say, `apply online.' What a waste and how humiliating after having news cameras expose your current situation with no results.
She went on to say:
He has applied for state jobs, federal jobs, temp jobs, and gone through city agencies and has not had any results. Interview after interview. This is humiliating for a man who used to take two buses and two trains to get to work from the Southside of Chicago to Rosemont, Illinois.
Mrs. Hoskins said she could never understand politicians who say that people like her husband were ``lazy and did not want to get up and find a job because they are getting unemployment checks.''
She asked:
How could they make such a statement about a man who had steady employment and good benefits? Who wants to collect an unemployment check and not have benefits for their family?
We have a modest home, one automobile, and we do not live above our means. We are trying to keep things together, but it is difficult.
She closed her letter with a request:
Can you please get this message across to the politicians?
Like so many American families, the Hoskins family lost a lot of ground financially while Theodis Hoskins was out of work.
Fortunately, there is a happy post-script to this family's story.
After more than 2 years of looking, Mr. Hoskins found a job. He is working about 23 hours a week at a Costco store in Chicago and he is grateful for the work.
The last thing the Hoskins family needs now is to lose $1,000 in income next year. Yet that is what will happen if Republicans refuse to extend the payroll tax cut for working families.
The Hoskins family and 160 million other working Americans will lose an average of $1,000 in income next year if Republicans insist on killing the payroll tax cut, which expires at the end of this month.
This past summer, working families in America suffered their biggest loss in wealth in more than 2 years. At the same time, corporations raised their cash stockpiles to record levels.
Our Republican friends say all the time that businesses need certainty. You know what businesses need even more than certainty? Customers.
Continuing the payroll tax cut puts money into the hands of consumers who are likely to spend that money. That is how you jump start an economy that is driven by consumer spending--not by giving bigger tax breaks to individuals and corporations that are already sitting on record amounts of cash.
We also need to maintain unemployment benefits for workers who have lost their jobs through no fault of their own, have exhausted all of their state unemployment benefits and still can't find work.
Mr. President, there are a lot of holiday traditions we look forward to. This new holiday tradition our Republican colleagues have started--threatening to cut off unemployment benefits--isn't one of them.
For the second holiday season in a row, unemployed workers and their families are being threatened with an imminent cutoff of federal unemployment benefits.
If Republicans refuse to maintain unemployment benefits, 2 million Americans will lose their jobless benefits by the end of February.
The Congressional Budget Office analyzed 11 different steps Congress could take to stimulate the economy. The most efficient short-term economic stimulus by far is extending unemployment benefits.
Every dollar we spend on unemployment generates $1.90 in economic activity. That is a 90 percent return on investment. Nothing else comes close.
According to the U.S. Census, emergency unemployment benefits kept 3.2 million Americans from slipping into poverty last year.
If the extended benefits aren't renewed, economist warn, economic growth next year could slow by up to a half-percentage point.
Some of our Republican colleagues who want to end the payroll tax cut for working families say they are concerned about the budget deficit.
We also have a serious jobs deficit in America.
They may be handing out million-dollar bonuses again on Wall Street and corporations are sitting on record amounts of cash. But there are still five job seekers for every available job in America.
Here is a sobering statistic. In the recoveries from the previous three recessions, the longest average length of unemployment was 21 weeks; that was in July 1983.
The average length of unemployment for this last recession, the Great Recession, is about 41 weeks--nearly twice the previous record.
That is the longest average unemployment since the government started keeping records in 1948.
Federal Reserve Chairman Ben Bernanke calls long-term unemployment a ``national crisis.''
He is right. The idea that we would abruptly end unemployment benefits for millions of Americans in the midst of this national crisis is hard to believe.
Not since the Great Depression have so many Americans been out of work for so long.
When I talk to people in my state who are running food pantries and emergency shelters, they all tell me the same thing. They have never seen so many families struggling so hard for so long.
Go to an emergency food pantry and you will see America's ``new poor'': families who were solidly middle class just a few years ago, who are now having to ask for help for the first time in their lives.
It may start with a job loss. As weeks without a paycheck stretches into months, many families find themselves in financial free fall. They may lose their homes.
The inability to support one's family financially very often leads to feelings of shame and fear, which can lead to isolation, which makes it even harder to find work.
According to the Centers for Disease Control, an estimated 6.6 percent of Americans were ``clinically depressed'' in 2001 and 2002. By last year, that percentage had increased to 9 percent--an almost 50 percent increase in 8 years.
Last year, the John J. Heldrich Center for Workforce Development at Rutgers University in New Jersey released a comprehensive study of the emotional and mental health consequences of long-term unemployment on individuals.
The title of the study is, ``The Anguish of Unemployment.''
Overwhelming majorities of the survey's respondents said they feel or have experienced anxiety, helplessness, depression, and stress after being without a job.
Many said they have experienced sleeping problems and strained relationships and have avoided social situations as a result of their job loss.
Carl Van Horn, a professor of public policy and economics at Rutgers and head of the Heldrich Center said that America faces ``a silent mental health epidemic'' as jobless Americans face the financial, emotional, and social consequences of being unemployed.
One of the respondents in the Rutgers survey said:
The lack of income and loss of health benefits hurts greatly, but losing the ability to provide for my wife and myself is killing me emotionally.
Children are especially sensitive to the effects of unemployment in the family. They pick up on their parents' stress and are more likely to suffer from poorer school performance and low self-esteem.
One recent study found that children in families with an unemployed parent were 15 percent more likely to repeat a grade in school.
In extreme cases, people who are emotionally fragile and overwhelmed may see suicide as the only way out of their troubles.
A study released last April by the Centers for Disease Control shows that suicide rates rise and fall with the economy.
It is the first study to examine the relationships between age-specific suicide rates and the economy.
It found that suicide rates rose to an all-time high during the Great Depression, fell during the expansionary period following World War II, rose again during the oil crisis of the early 1970s and the double-dip recession of the early eighties, and fell to its lowest level ever during the booming nineties.
It also found the strongest link between business cycles and suicide among people in prime working ages, 25 to 64 years old.
It is too soon to know for certain whether we will see another increase in suicide as the result of the Great Recession that started in 2007, because government figures lag. But a preliminary estimate by the CDC shows that suicide ticked up slightly in 2009, becoming the 10th leading cause of death in the United States.
It is important to stress: It is never just one factor that drives people to suicide, and most people who suffer terrible losses never even think about suicide. But for those who are already emotionally vulnerable, this time of unprecedented longterm unemployment can be very dangerous.
One more measure: Between 2004 and 2010 calls to the National Suicide Prevention Lifeline increased 72 percent. Last year, almost 40 percent of calls to the hotline involved people with financial and unemployment concerns.
The Atlantic magazine recently asked readers to share the one thing people didn't understand or appreciate about looking for work. The responses poured in.
One reader wrote:
For those of us prone to depression, the job search can amount to a heroic effort.
Another wrote:
Possibly the worst thing about being unemployed is having to suffer through the pundit and the politician classes gassing on interminably about what it's like to be unemployed, what kind of people are unemployed and how they think and act, when none of them knows or understands one damn thing about it, nor do they even want to. Get down here on the ground, and try to go a year on $350 a week with no hope in sight, and then tell us why the lazy unemployed just need a good swift kick to get the country moving again.
Still another wrote:
I am over the bruises to my ego ..... The worst thing though is the impact on my kids. We were making $120K plus two years ago. Now, about $35K. Lost the house. Thankfully still in the same school. That said, the kids went from being respectably comfortable in their cohort to being comfortable if tattered (used clothes, battered rental, same old car, no summer trips, etc.). Thank God they are still young (just started third grade) but we're not having any sleepovers here no matter how much they ask. I am afraid for the social impact on them. They are so upbeat, so enthusiastic. They don't know we're in a ditch. It would break my heart if they figured that out.
Yet another wrote:
Unemployment dehumanizes the real person. They lose the essence of their identity and value. To become a number, a label, a resume, a failure, a defect, unproductive, desperate, wishful, delusional, depressed, poor and separated from respectful society. Being unemployed is to be silently disrespected. On a par with being homeless, mentally ill or addicted.
The website Unemployed-friends.com is another place you can hear the stories of unemployed Americans who are trying to hang on.
One person wrote:
Living in constant fear and feeling helpless to do anything about it is bound to take its toll. I really feel like I am going to have heart attack. Severe chest pains, shortness of breath, heartburn, but it has been going on for months and I'm still here. By the way, no doctor will see me without money for tests up front. I've already had the consult and that almost broke me.
Another wrote:
Another rejection notice from Lowe's today. Second time they've rejected me with the automated rejection notice--this time for ``seasonal plumbing department associate.'' ..... I am willing to go from a 17-year professional to working doing anything I can. Retail, washing cars, pumping gas, flipping burgers ..... be it whatever. I cannot even land that!!!!!.
This is what one woman posted at 1 o'clock in the morning:
I'm so tired. I have no more fight left in me. I am a tough NY girl but this recession has sucked the life out of me. ..... I've exhausted all resources, borrowed from everyone, lost most of everything including my pride and self esteem. I feel like nothing, a total zero, non-productive person. ..... I fully expect to look in the mirror one day and see no reflection. I am fading away, becoming irrelevant. How will I ever recover?
Peter Kramer is a professor of psychiatry at Brown University and the author of two best-selling books, ``Listening to Prozac'' and ``Against Depression.''
In a recent op-ed in The New York Times, he wrote:
I began my psychiatry residency at a community mental health center. The director liked to put trainees in their place. He'd trade any of us, he said, for a good employment counselor. Medication and psychotherapy were fine, but they worked better if a patient had a job. ..... There is no substitute for the structure, support and meaning that jobs offer.
He went on to say that if Congress wants to do something about this silent mental health crisis that is hurting so many Americans, the best thing we can do is work with the President to pass programs that will get Americans back to work.
I couldn't agree more and I urge our Republicans colleagues to do just that.
In the meantime, at the very least, we need to maintain unemployment benefits for people who have lost jobs and are still looking and continue the payroll tax cut so that families that are working aren't hit next year with a $1,000 tax increase.
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