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Decision Time – Unemployment Extension

From an uneasy (that it might not pass) Washington Post:

In Congress, it’s decision time on long-term unemployment benefits

By Perry Bacon Jr.
Tuesday, February 9, 2010; A15

As the Senate this week considers a "jobs bill" to reduce unemployment, lawmakers will have to decide whether to continue an unprecedented change in how the country treats people who are out of work, which was quietly approved last year.

Through a series of laws, including the $787 billion economic stimulus, people in states with high rates of unemployment are eligible to get jobless benefits for up to 99 weeks, an all-time high. But Congress did this in a piecemeal fashion, and it must pass legislation to keep benefits going for an estimated 1 million people who would otherwise become ineligible at the end of the month.

The Senate approved a measure that extended benefits from 79 to 99 weeks in a unanimous vote last year, but GOP lawmakers have not yet said whether they will continue to support the benefits, particularly if they are included in a larger jobs package. And some Democrats favor extending the benefits only temporarily, while another bloc wants an extension that would last the rest of the year.

Unemployment benefits usually last just 26 weeks and have been extended to about 70 weeks in previous economic slowdowns. But this time, Congress not only has extended them but also is spending more than $13 billion each month to fund them, because the federal government is taking on all the cost after the 26 weeks, which states pay for. About 12 million Americans are receiving benefits.

The benefits pay on average 36 percent of a person’s salary from the job that was lost, and the average weekly amount of benefits is about $325. Some economists have said that unemployment benefits can lead people to wait longer to find full-time work. But given how long it is taking for the economy to turn around and for employers to start hiring again, few lawmakers in either party have expressed much reluctance to extend the benefits.

"We have unprecedented long-term unemployment," said Maurice Emsellem, a policy co-director of the National Employment Law Project, which is advocating expanded benefits. "Record unemployment is not the right term; it far surpasses any previous period of unemployment, which is why we need these extra weeks of benefits."
The squeaky wheel…

Make no mistake, this is where the billions for the next ‘jobs bill’ will go.

And why not? What better way to make more people dependent on the government – and thereby make more Democrat voters.

This article was posted by Steve Gilbert on Tuesday, February 9th, 2010. Comments are currently closed.

5 Responses to “Decision Time – Unemployment Extension”

  1. proreason

    Unemployment. The new normal.

  2. U NO HOO

    A jobs bill that pays not to work?

    1984 anyone?

  3. Baltek

    A good synopsis of the current position in congress, but unfortunately you seem to have missed the purpose of Unemployment Insurance.

    It may be true that unemployment insurance would keep some people from going back to work as quickly as possible, but given that the average replacement rate is under 40% of your income, and given that most Americans habitually live from paycheck to paycheck as is, this is unlikely to be a widespread phenomenon.

    What Unemployment Insurance IS intended to do, however is twofold. First, Unemployment Insurance is designed to ensure survivability. Even an Economist such as myself must recognize that a purely free-market system would happily accept 12 million bodies piling up in the streets as a mere consequence of the business cycle. Both as a human being and an economist, we must recognize that this should not be allowed to happen (both because we obviously don’t want bodies piling up in our streets, but also because we have witnessed that this sort of event, when it occurs in other countries, leads to a long-term negative impact on the economy and slows growth for generations.)

    Second, Unemployment Insurance is also designed (and relatively well designed, I might add) to make recessions significantly shallower, even if it might (and there is little proof either way) make them slightly longer. Unemployment insurance is a “patch” on the hole that would occur in consumer spending if we were to not provide payments to the unemployed. Currently given the 12million figure for unemployment and the average weekly allotment of unemployment money, the UI program is keeping roughly 200 billion dollars of consumer spending from vanishing this year. I would posit that, if you would like to see this recession worsen, eliminating that 200 billion dollar patch on our consumer spending “flat-tire” is exactly the way to do that.

    What you would see without the UI program is an even steeper down slope and a much rougher period of time than you see with it. The layoffs across the country decrease consumer spending, which decreases business revenue which leads to more layoff which decreases spending…. etc.

    Sadly, the only way to pull up from such a nosedive is for someone to increase their spending level. Consumers can’t, business can’t (because the banks are still tight with credit), that leaves only good ol’ Uncle Sam to do the job. The problem is that we have been deficit spending through the good times and bad ever since Regan and his military buildup. Because of that irresponsible fiscal behavior, we have been unable to save the reserves of cash that should have been put away for a time like this.

  4. Control and dependence is more important than actual jobs.




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