Grading PolitiFact (Ohio): Sherrod Brown claims unemployment is insurance, not welfare

The issue:

The fact checkers:

Stephen Koff:  writer, researcher
Robert Higss:  editor


Analysis:

Sherrod Brown appeared on MSNBC back on Nov. 30 and made the claim pictured in the above graphic (see "The issue").

Context is a wonderful thing.  Unfortunately, PolitiFact provides no way to verify the full context of Brown's conversation with Contessa Brewer (though Brown rhapsodized about the same subject on the Rachel Maddow Show back in July).

PolitiFact does provide enough context to make it look like Brown contradicts himself:

Brown says that Congress needs to show some compassion, because so many Americans are struggling to find work.

"Understand, this is unemployment insurance," Brown told MSNBC anchor Contessa Brewer on Nov. 30. "It’s not welfare, as a lot of my Republican colleagues like to suggest it is. You pay into it when you’re working. You get help when you’re not."

First Brown claims that Congress needs to show compassion.  Then Brown says that unemployment payments are a form of unemployment insurance.

Is an insurance company exhibiting "compassion" when it pays a claim?

No.  In most instances insurance companies pay claims because of a contractual obligation to pay the claim.  It's always possible, though not likely, that an insurance company will pay benefits beyond those called for in the terms of the contract.  Benefits in the latter category are conceptually identical to charity.  Brown, then, is arguing for charity (extending long-term unemployment benefits) and justifying it as the rightful payment of an insurance benefit.

It isn't cut and dried in the world of PolitiFact, however:

Brown raises several points that we thought were worth checking. The key point: Do workers pay into the unemployment system and then draw benefits from it if they lose their jobs?

PolitiFact's "key point" completely overlooks the context of Brown's statement.  Yes, prior to emergency extensions done at the discretion of the insurer (the government), unemployment benefits are an insurance benefit.  But there's no controversy in Congress about paying those benefits.  The controversy surrounds the interminable extension of unemployment benefits.

PolitiFact then digresses into the issue of who pays the premium for unemployment benefits.  Making the long story shorter, the employer pays the premium but most or all of the payment is considered part of the price of employment.  Regardless, PolitiFact is missing Brown's underlying argument and his main point as a result.

After that, PolitiFact notes that the federal contribution to unemployment benefits is not part of the insurance arrangement at the state level.  In other words, the federal dollars are not part of the insurance benefit for unemployment insurance.  One of PolitiFact's expert sources called the federal portion "deficit financing." Brown was talking about money appropriated by Congress.  How does he get away with justifying the expense as meeting the obligations of an insurance program?

PolitiFact is hot on the trail, albeit moving in the opposite direction:

One more component of Brown’s claim: that "a lot of my Republican colleagues" like to suggest that unemployment insurance is like welfare. This was an important part of the claim because it explains why he felt the need to clarify how the system is funded -- not by freeloaders but by workers who pay into the system.

Apparently we're supposed to ignore the fact that the federal component is not funded by the insurance premium.  PolitiFact uncovered that fact and has since ignored it.

As for the rabbit-trail itself, PolitiFact finds Brown "Half True" in saying that a good number of his Republican colleagues suggest unemployment insurance is like welfare.  The justification?  A good number of Republicans say that unemployment insurance serves as a disincentive to find work.

Huh?

Isn't that entirely beside the point?  If welfare made it 100 percent certain that a person would find a job it would still be welfare, wouldn't it?  How did we end up defining "welfare" in terms of its supposed disincentive effect?  That conception of "welfare" is apparently assumed in the story.  The author provides no justification (and the editor apparently couldn't care less).

PolitiFact ends up breaking down Brown's claim into three component parts (in spite of their simultaneous effort to grade just one item where possible).

So let’s break down Brown’s claim and our fact-finding.

• "A lot of my Republican colleagues" like to suggest that jobless benefits are like welfare. What he meant was clear enough -- that they equate jobless benefits to the public dole. We can’t quantify "a lot." But Brown’s staff provided numerous examples that show there are Republicans saying they worry that jobless benefits encourage people to stay out of work. This isn’t to suggest it is a majority view. But Brown did not say "most." He said "a lot." This part of the claim, then, warrants at least a Half True.
• "You pay into it when you’re working." Economists from the right and left agreed that this is essentially correct, with some elaboration required. So it is Mostly True.
• "You get help when you’re not." This is True.

No doubt the elephant in the room feels greatly relieved.

The key issue should have been whether unemployment compensation was comparable to welfare according to the context in which Brown was speaking.  PolitiFact rated the first component item "Half True" based on an illogical procedure, since welfare is welfare regardless of incentive effects or the lack thereof.  The second and third items relate tangentially to the key point.  Employees pay for unemployment insurance ("You pay into it when you're working"=>"You get help when you're not"), but Congress doesn't appropriate funds for extended unemployment benefits according to the insurance contract.  Extensions self-evidently go beyond the normal schedule of benefits.

PolitiFact bought Sherrod Brown's red herring and ended up pursuing rabbit-trails.

Oh, and the "caveat":

This entire discussion needs a caveat. MSNBC put Brown on the air because of the ongoing debate over extending federal jobless benefits. The reason for debate is the fact that the federal government has to pick up the tab and it will have to borrow more to do so, at least in the short term. To put matters clearly: You pay into the unemployment compensation through your employer, and that pool of money pays for your state benefits -- but not your federal benefits -- if you lose your job.

So, apart from the fact that Brown was misleading the audience, what he said was Mostly True.  Or something like that.  Supposedly.

The grades:

Stephen Koff:  F
Robert Higgs:  F

I've applied the "journalists reporting badly" tag.

Afters:

Sherrod Brown made a remarkably similar set of claims in July on the Rachel Maddow Show:

MADDOW:  One of the things that was proven not only to be the right thing to do with people that are down on their luck but also a big economic stimulus is extending unemployment benefits.  That is something you and the Senate have been dealing with over and over and over again as republicans continue to block it.  Do you think the Senate will be able to get an extension next week?
 
BROWN:  I think we are, because Senator Byrd‘s replacement will be appointed by Governor Mansion of West Virginia.  We need one more vote, but that is the hypocrisy.  They insist we—they give tax cuts to the rich, they start wars, they do a drug and insurance company bailout giveaway.  Charge that to our grandchildren.
 
All of a sudden now, we have to pay for unemployment benefits for working people who have been in the job market for 20 or 30 years, working.  They lose their jobs.  They‘ve paid into this.  Republicans seem to think, republican senators, 41 of them vote no on unemployment time after time after time.  They seem to think that unemployment is welfare.  It‘s insurance.  You pay in when you‘re working, you get help when you‘re not. 

The problem, of course, is that the repeated votes where Republicans express opposition to extending unemployment benefits all involve extensions of unemployment benefits.  Brown's words are very misleading, and PolitiFact finds it impossible to notice.

That same Rachel Maddow segment was the subject of an earlier PolitiFact fact check.  Koff and Higgs received the "journalists reporting badly" tag on that one, also.



Dec. 11, 2010:  A URL in the final paragraph led to the wrong destination, though not by much.  Fixed it.