Mitt Romney Touts Privatizing Unemployment Benefits Along With Reduction In Spending On Anti-Poverty Programs

Mitt Romney stood up for those poor downtrodden corporate "people" that those evil liberals who crashed his event in Iowa this Thursday were asking to have their taxes raised on, but if you're one of the long-term unemployed, well, it appears you're on your own.
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Mitt Romney stood up for those poor downtrodden corporate "people" that those evil liberals who crashed his event in Iowa this Thursday were asking to have their taxes raised on, but if you're one of the long-term unemployed, well, it appears you're on your own.

During the Republican debate in Iowa, when asked if he would extend unemployment benefits for those who are about to lose their benefits in a few months, not only did Romney say that he would not extend them, but he also touted the idea of privatizing unemployment benefits and changing our current system to one offering unemployment insurance savings accounts.

What could possibly go wrong? I haven't read much on this, so I'm no expert and it would be nice to hear more from anyone who is in the comments section, but this just looks to this layman as another way to draw money out of another one of our social safety nets in the name of "personal responsibility." Romney said this would "make the system work better by giving people responsibility for their own employment opportunities." That's rich since they don't have much control over those "opportunities" if there are no jobs to be found in the first place. Not everyone's got a rich family and the "opportunity" to become some multimillionaire vulture capitalist like our buddy Mittens here did. Some of us have to make money the old fashioned way, like actually working for it.

And god knows with some of the greatest income disparity since the Gilded Age, we can't have our priorities be spending more money on anti-poverty programs, now can we? No, better to be reducing those taxes and burdensome regulations on those "job creators" because the have-mores are just struggling so badly right now in Mitt Romney and the GOP's fantasy-land. Heaven forbid we do anything to hurt their feelings or they might go Galt on us and leave the country and take their jobs with them.

Oh wait, that ship has sailed already, hasn't it? When I hear one of these birds start talking about fixing our trade imbalances and tying these tax cuts they love so much to job creation in the United States, I'll believe that they actually care one iota about doing anything productive to fix our unemployment problems in America. Sadly, we're not hearing that from any of them other than members of the Progressive Caucus in the House of Representatives right now.

Karoli adds:

Romney's tossed-off remark here about changing the nature of UI is a proposal that we don't hear a lot about, but which is a fondly-held right wing dream. Kochtopus Member Mercatus Center jumped on the bandwagon in early 2010 with this policy paper, right in the middle of a debate over extending UI for a few extra paltry weeks. Here's the gist of their "recommendation":

Unemployment insurance is meant to support workers who lose their jobs during downturns. However, public unemployment insurance produces unintended consequences,leading to lower prosperity. A more effective approach to providing support for workers is to establish Unemployment Insurance Savings Accounts (UISA).13 These individual savings accounts are funded by a percentage of wages contributed by the employee and employer in lieu of the compulsory contributions currently made by employers to public trust funds. When an individual becomes unemployed, she may access the account. If the individual is never unemployed, she can roll those savings into a retirement account.

UISA eliminates the perverse incentives of publicly provided benefits. Workers must finance their own unemployment, providing an incentive to avoid job loss and increase the job search effort during unemployment. Reducing the payroll tax on employers would increase wages, leading to higher contributions to UISA accounts. While the current program is a tax on all of the employed (some of whom will never use the benefit), a UISA belongs to an individual worker. Essentially, UISA is a form of forced savings: A worker's contribution to the unemployment account is paid directly back to her.14 Chile adopted this approach in 2003, and empirical data suggests that most Chilean workers are better off as a result.15 Employees contribute 0.6 percent of monthly earnings, and employers contribute a further 2.4 percent to an individual savings account. An unemployed worker may draw between 30 to 50 percent of the previous wage for up to five months.16 Upon retirement, unused unemployment savings roll into the worker's personal savings account.17

A couple of quick thoughts on this. First, the whole thing is yet another way to wrest workers' safety nets away and hand them to Wall Street. Can you imagine being a worker with money in these accounts and having it subject to the whims of these markets? Please. And second, the Chilean model purports to get those "deadbeats" back to work, but there is absolutely no evidence it decreases the unemployment rate or protects workers. None. All it does is create a situation where a worker will do whatever they can with no job security or benefits simply to make ends get closer to each other even if they don't actually meet. It was started in 2002. In 2009, Chile's poverty rate rose for the very first time in 23 years. And guess what? It was attributable to joblessness and the global economic crisis. Oh, and here's some more detail on Chile and the student protests over student debt, access to education, and income disparity from yesterday. Ah, yes, the Great Conservative Experiment.

Guess that didn't work out so well for them.

Transcript below the fold.

FERRECHIO: Gov. Romney, you suggested replacing government jobless benefits with individual employment savings accounts. Jobless benefits for millions of Americans are about to expire in just a few months. If you were president right now, would you extend them?

ROMNEY: We've got a lot of people out of work. We've got a president that has a entirely failed economic policy and frankly doesn't know what to do to get this economy going again. Surely we're going to help those people who can't find other ways to care for themselves. But the most important thing we're talking about tonight is making sure that President Obama is replaced by someone who knows how to get this economy going again.

That's what this debate is really about. And that's what the American people want to understand. Unemployment benefits – I think they've gone on a long, long time. We have to find ways to reduce our spending on a lot of the anti-poverty programs and unemployment programs, but I would far rather see a reform of our unemployment system to allow people to have a personal account, which they're able to draw from, as opposed to having endless unemployment benefits.

So again, let's reform the system – make the system work better by giving people responsibility for their own employment opportunities and having that account, rather than doling out year after year, more money from an unemployment system.

FERRECHIO: A real quick follow up. Would you sign a bill to extend unemployment insurance if you were president right now?

ROMNEY: If I were president right now, I would go to Congress with a new system for unemployment which would have specific accounts which people could withdraw their own funds and I would not put in place a continuation of the current plan.

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