Mark Zandi: 'It Would Be Counterproductive' To Offset Unemployment Benefits Now

Economist Mark Zandi said Wednesday that Congress ought to extend unemployment benefits without paying for them right now.

After acknowledging the the high costs to the federal government of unemployment programs -- $70 billion this year -- and the nation's record debt load, Zandi said it would be worse for the country not to extend emergency unemployment programs.

"It would be desirable if the costs of the [unemployment] benefits were paid for, not now but in the future once the economic expansion is in full swing," said Zandi, chief economist at Moody's Economy.com.

Republicans have been blocking -- for the second time in a month -- a $9 billion measure to extend eligibility for enhanced unemployment benefits by 30 days, insisting that the measure ought to be paid for (or "offset") rather than added to the $1 trillion-plus budget deficit this year. Due to congressional inaction, the enhanced benefits programs lapsed on April 5, jeopardizing a lifeline for hundreds of thousands of laid off workers relying federally-funded unemployment benefits. The GOP says it's more worried that deficit spending will lead to the country's eventual demise, pointing to the rising prices of government debt.

Zandi, an adviser to Sen. John McCain (R-Ariz.) during the 2008 presidential campaign, disagrees.

"The greater immediate risk is not that long-term interest rates will rise too high, but that hiring and job growth will fail to revive as anticipated," said Zandi during a Senate Finance Committee hearing on unemployment insurance. "Costs to taxpayers will be measurably greater if the economy does not turn the corner to expansion but instead retreats back into recession."

Sen. Jeff Bingaman (D-N.M.) followed up: "So you're suggesting that the current proposals to extend unemployment benefits need to be approved without an offset?"

"Yes, it would be counterproductive to try and offset it this year or the next," Zandi said.

Zandi also urged Congress to reauthorize stimulus-funded jobs programs that will be allowed to lapse in September.