There are a couple of reasons why any positive action on unemployment is practically impossible. One is stupid, stupid Democrats who think hypothetical future political attacks are a bigger threat than the rapid dissolution of the American middle class. The other is that popular and commonplace government stimulus policies suddenly become controversial and horrible once a Democrat president proposes them.
Take direct state aid. States can't run budget deficits, and they tend to have regressive tax systems (because they need to "attract business" by placing the tax burden onto working people instead of corporations and the wealthy), so a burst housing bubble, massive recession and ongoing unemployment crisis basically means a whole lot of states that need to slash essential services to balance the budget. Federal aid allows them to keep the lights on.
The Wall Street Journal today has a column by Hoover Institution fellow Paul E. Peterson reframing the concept of aid to cash-strapped states as a "blue-state bailout," because "bailouts" are unpopular and it is more fun to imagine that Obama is rewarding his "most fervent supporters" with free money than it is to think that the president just wants to help big states avoid massive layoffs.
It is sort of brilliant. Just imagine how thrilled the memo-writers at Fox News must be to have this talking point. "Blue-state bailout." "Federal money for healthcare and education" versus "blue-state bailout." Which one makes you madder?
Peterson and co-author Daniel Nadler argue that the aid is a handout to liberals because of a study that shows that states with heavily unionized public-sector work forces pay slightly higher interest rates. Therefore, the aid money will ... help these states more than it will help "red states," which means that the aid to all states is actually only supposed to secretly help liberal states, QED. It's dumb, but in an academic-sounding way, which is why it's on the WSJ editorial page instead of RedState.
The actual argument of the column is that emergency aid to states will lead to more dependence on federal money and increase the risk that states will need bigger aid packages in the future, and the feds are "tacitly" assuming responsibility for state debts by not letting states go bankrupt, and the situation will lead to higher interest rates and more debt and something something sovereignty. That is all standard-issue conservative economics. Nothing in the editorial actually makes the argument that the jobs bill is, as the headline says, "A Blue-State Bailout in Disguise." The closest they come is saying the bill will have "special benefit" to blue states. But the point of the column isn't to make an ancient point about what conservatives have thought for years, the point is to plant the meme that this jobs bill is a "bailout." Bailout bailout bailout.
This is a brilliant new way of framing an issue that conservatives have been unable to make much headway on since Reagan found himself unable to slash state aid spending to the degree that he wanted to. The problem has always been that states need the money to do good things that people in those states want them to do. Conservatives can convince people that state aid is bad in the abstract, but Medicaid does actually need to be paid for, by someone. The Republican governors who lined up to beg President Bush not to slash Medicaid funding would probably reject the notion that they were requesting a "red state bailout," but Republican governors tend to be more pragmatic than Republican members of Congress.
Keep your ears open, because I guarantee "blue-state bailout" will be a new and popular talking point from now on.