Social Services In Jeopardy

MADELEINE BRAND, host:

So, there are some ideas to help the economy and get Americans back to work. What about people who have already lost their jobs or their homes? What about the social safety net? We're going to talk now with Princeton economist Alan Blinder about the social safety net and what can be done to shore it up. Welcome to the program.

Dr. ALAN S. BLINDER (Economics, Princeton University): Thank you. Glad to be here.

BRAND: Well, first let's talk about what's wrong with it and the holes in it. Where do you see the problems in the social safety net?

Dr. BLINDER: Well, I think what's wrong with it is manifold. Our social safety net is embarrassingly weak; it barely merits the name. We give unemployment benefits that are stingy by rich countries' standards over periods that are short by rich countries' standards. And something a lot of people don't know, only about one-third of the unemployed even qualify because of various eligibility requirements. And on top of that, people lose their health insurance, some of them lose their pensions and so on.

BRAND: And, we have estimates now that the unemployment rate will go up to at least 8 percent now.

Dr. BLINDER: I think that's right. I think at this point, we'll be fortunate or skillful, depending on how you want to think about it, if we can hold the line at 8 percent. I think higher is probably likely.

BRAND: OK. So let's talk about unemployment benefits, and what do you think President-elect Obama should do about extending those?

Dr. BLINDER: Well, fortunately, the Congress did one thing in the lame-duck session, which is extend unemployment insurance benefits. That will probably have to be done again. I think part-time workers should be eligible for - in large measure, they are not. And then what I would like to - really like to do - see done, I should say, which requires changes in law, is to cover the unemployed with health insurance.

BRAND: Don't they get COBRA coverage?

Dr. BLINDER: Yes, they do. You have to pay for that.

BRAND: Uh-huh.

Dr. BLINDER: You have to pay for that a lot more than you were paying - or when you were employed; that depends on your employer - yes, but a lot of them do get COBRA coverage. I think that needs to be liberalized.

BRAND: So, all unemployed people should be eligible for health insurance?

Dr. BLINDER: Yes, through - you know, this will be a logical initial step towards universal coverage.

BRAND: Well, speaking of that, do you think that that's something that Barack Obama should take on as soon as he becomes president? Or do you think that reforming health care is something that should wait while he tackles the most immediate economic problems?

Dr. BLINDER: Yeah, it's a really good question, and I'm going to give you both answers. The answer is, given the need, he should take it on right away. Giving the number of emergencies that are on his plate, it'll probably not be possible for him to take it on right away, and that's one of the reasons that I advocate this sort of first baby step towards covering the unemployed.

BRAND: Well, while I have you on the line, let me get your reaction to the announcement of Timothy Geithner as the new Treasury secretary and Lawrence Summers as President-elect Obama's chief economic adviser.

Dr. BLINDER: Well, I think you've got a very good team coming in. I was particularly glad to see Tim Geithner put in as Treasury because like it or not, the incoming Treasury secretary, whoever he would have been - and it's Geithner - is going to be a firefighter, and he's engaged in it today in his job at the New York Fed.

BRAND: Although there has been some criticism that this team represents a very centrist, pragmatic approach instead of a more ambitious approach that maybe you've been calling for.

Dr. BLINDER: Well, they've been talking pretty ambitious so far. We'll see. They are centrists, that's for sure. Within the Democratic Party, nobody would look at this group and say, that's a bunch of lefties.

(Soundbite of laughter)

Dr. BLINDER: That is certainly right, but I think they're thinking big. And you know, in Geithner's case, along with Bernanke, at the Fed they've been doing big. The Fed has been doing one unprecedented, amazing thing after another.

BRAND: Yeah, to mixed success, though.

Dr. BLINDER: To mixed success, unfortunately.

BRAND: Alan Blinder is an economics professor at Princeton University. Thanks for joining us.

Dr. BLINDER: My pleasure. Transcript provided by NPR, Copyright National Public Radio.