On Tuesday, just after Senate Finance Committee chair Max Baucus (D-Mont.) released a revised jobs-stimulus bill I noted its lack of ambition, particularly with regard to COBRA subsidies. Sure enough, Families USA, a nonprofit health-care advocacy group blasted the bill on Wednesday. The original stimulus bill from 2009 offered subsidies for laid-off workers to extend their health-insurance coverage under COBRA, which is normally quite expensive. The period in which laid-off workers are eligible for COBRA subsidies were extended several times, but not in the House or new Senate versions of the new stimulus measure.
The group's report says "the loss of COBRA subsidies for newly unemployed workers will result in enormous hardships and will undoubtedly increase the number of uninsured Americans," and it complains that such an increase contradicts the spirit of recently passed health-care reform.
They're finding some support in Congress: Sen. Bob Casey (D-Pa.) proposed an amendment on Wednesday that would restore extended COBRA support. Given the public outcry over deficit spending, Democrats are leery of adding the COBRA subsidy extension's projected $8 billion cost. But liberal economists contend that meaningful deficit reduction cannot take place until the economy rebounds, and that support for the unemployed to prop up consumer demand is an essential part of the recovery.
Economist Dean Baker of the left-leaning Economic Policy Institute told NEWSWEEK in an e-mail: "It's ridiculous that members of Congress are cutting benefits and aid to the states at a time when we have near double-digit unemployment.
"This is not a case of tough tradeoffs, it's a case of pointless pain. The result of these cutbacks is not just the pain to the beneficiaries, it is also the lost demand and output and the further rise in unemployment this causes.
"Members of Congress should understand how the economy works. However, they either don't know or care and the result is that millions of workers will stay unemployed."
So will Democrats feel more pressure to excite their base by expanding the temporary or social safety net, or to prevent attacks on their fiscal responsibility? If recent history is any guide, the smart money is on the latter.