Expanding Unemployment Benefits Creates Jobs?


You would think that paying people to be unemployed would be counter-productive to growing the economy, especially when the money to pay the unemployed comes from taxes on businesses that do the hiring. So the news that long-term unemployment benefits for some 2 million American workers are going to end unless re-authorized by the end of the year should be good news.

These benefits are a burden on the economy.

But the Associated Press is reporting that a new CBO report concludes that extending America’s already protracted unemployment benefits will “create jobs.”

WASHINGTON (AP) — Extending the current level of long-term unemployment benefits for another year would add 300,000 jobs to the economy, according to a report from the Congressional Budget Office.

The analysis released Wednesday from the nonpartisan office estimates that keeping jobless benefits would cost the government $30 billion. But it would also lead to more spending by the unemployed, boosting demand for goods and services and creating new jobs.

It’s pretty sad when our economy is so stagnant we have to look to paying people to be unemployed as stimulus.

Remember the stimulus checks which were sent out under President Bush as a part of the Economic Stimulus Act of 2008? The thinking was that if the government just started writing checks to people they’d spend that money and that would stimulate the economy. Obama administration officials have made the same argument about food stamps, saying they stimulate the economy when recipients of those benefits buy food.

Of course, missing from that equation is the cost of sending out the checks or paying the benefits in the first place. Somebody has to pay. Even if we’re borrowing the money to send out the checks, or to pay out the benefits, those are just delayed tax hikes. One day all the money we put on the national credit card has to be paid back with interest.

What’s the economic impact of that?

And according to the same CBO report, expansive unemployment benefits “[provide] an incentive for recipients to stay unemployed longer than they otherwise would have.”

Better to have people back to work than representing a burden to taxpayers.

Rob Port

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

Related posts