Posted on 11/30/2010 7:28:51 PM PST by sickoflibs
Extending unemployment benefits for America’s long-term jobless can only help the economy, say experts on Wall Street and in Washington. But Republicans in Congress are determined not to appropriate any more money for unemployment assistance, citing the need to reduce federal spending.
Jobless benefits for two million Americans are set to expire within two weeks—a development that could have negative ramifications for an already weak economy. Alec Phillips, an analyst with Goldman Sachs, told The Wall Street Journal that allowing unemployment insurance to expire would lower economic growth by half a percentage point.
In a report(Study : 'The Role of Unemployment Insurance As an Automatic Stabilizer During a Recession July 2010'(pdf) ) commissioned by the Bush administration U.S. Department of Labor, it is estimated that every dollar spent on jobless benefits has the effect of $2 spent in the economy. This is because unemployment checks allow the out-of-work to still be a part of the consumer economy and purchase goods and services.
But getting another extension of benefits during the waning days of the lame-duck Congress is proving difficult. On Thursday, the House voted 258 to 154 in favor of the extension, but fell short of the two-thirds needed for passage under fast-track procedures. Democrats voted 237-11 in favor of the bill, while Republicans voted 143-21 against it. The program has already been extended seven times, due to the slow recovery and persistent high unemployment.
Democrats may try to win Republican support for the unemployment program by offering to support an extension of the Bush-era tax cuts for the wealthy.
Although it may seem cynical for Congress to be pushing help for the rich rather than for the poor, it is worth noting that almost half the members of the new Congress are millionaires.
My note : The actual study summary at the link they give says
“The average multiplier effects of real UI variables on real GDP were plausible and higher for regular (2.0) and extended benefits (2.0) than for real UI taxes (-1.4). Given the long lags in the tax response, measurable negative effects of increased UI taxes will extend from 2010 into several later years.”
at link: Study : 'The Role of Unemployment Insurance As an Automatic Stabilizer During a Recession July 2010'(pdf)
I posted this because it is being repeated over and over by Democrats to sell endless benefits and sounds idiotic. Today Cavuto (FNC) had a small business owner on who said that many job candidates will not take jobs till the compensation runs out.
‘Free lunch pays for itself’ ping!
Well, if we just give everyone a monthly sum equivalent to the unemployment compensation, we’ll double our GDP in no time.
Quit working....save the economy. Riiiiight
I guess that means that many of the unemployed will be competing for minimum wage jobs. With the stimulus of unemployment compensation looking like it's coming to an end (and what a shock, after an election) the real economy is about to be unmasked.
If you think things are bad now, you ain't seen nothing yet.
I would be surprised if congressional Republicans don't end up extending it. The inflationary forces created by the government, minimum wage, mandates, payroll taxes and QE2 can all make unemployment brutal. So I agree. But all and all, extended unemployment compensation works to extend a recession indefinitely.
Just ~ 4 years ago Bush, McCain, establishment Republicans and Democrats claimed we need amnesty because we don't have enough low skilled low paid workers to fuel the economy. I posted a Baltimore Sun editorial making that argument. I should dig that up.
Unemployment compensation is nothing more than a huge band-aid for a big wound that Government hopes will heal. But, it can't heal because of Government.
“We don't have enough low-wage workers to serve all their needs in retirement - and boomers are anticipated to be a highly active set of retirees, living longer and with more demands on the economy than their parents ever called for. In other words, we need workers, especially low-wage ones, and we have not bred enough of them in-house, so to speak. Immigrants can fill these needs now and in the future......I'm always amazed, when talking about immigration, that so many well-educated people are oblivious to the various levels within our labor force. They are grooming and educating their children to hold professional, well-paying positions. But these same folks seem blind to the idea that we will always need many, many low-wage workers - that the economy as a whole does not turn on the labor of doctors and nurses and the highly skilled alone. Someone has to take out the trash, mow the lawns, wash the dishes, pick the crops, paint the houses, cut up the pork loins and gut the chickens. “
Baby boomers need immigrants (or “not enough poor workers in America”, what???) 2007 Baltimore Sun editorial
Guess what the Sun is saying NOW..These unemployed low skilled workers are doing their part by collecting unemployment checks and stimulating the economy by spending them. Yep.
I pinged you on #8. You made me think to find it with your minimum wage comment. It should come in handy :)
Thanks!
Unemployment (extended) = salary not to work.
2:25 PM EST, November 30, 2010
WASHINGTON (AP) — If Congress lets unemployment benefits expire this week for the long-term unemployed, they won't be the only ones to feel the pain. The overall economy would suffer, too.
Unemployment benefits help drive the economy because the jobless tend to spend every dollar they get, pumping cash into businesses. A cut-off of aid for millions of people unemployed for more than six months could squeeze a fragile economy, analysts say. Among the consequences they envision over the next year:
— Annual economic growth could fall by one half to nearly 1 percentage point.
— Up to 1 million more people could lose their jobs.
— Hundreds of thousands would fall into poverty.
“Look for homelessness to rise and food lines to get longer as we approach Christmas if the situation can't be resolved,” says Diane Swonk, chief economist at Mesirow Financial.
The issue is expected to be taken up in the lame-duck session of Congress that resumed Monday. Among other unfinished business, lawmakers are likely to vote on whether to extend 2001 and 2003 tax cuts that are set to expire at year's end.
The average weekly payment for the roughly 8.5 million people receiving unemployment benefits is $302.90. But it ranges widely: from an average of $118.82 in Puerto Rico to an average of $419.53 in Hawaii. Each state sets the amount through a formula meant to replace a portion of an unemployed person's old income.
That money ripples through the economy, into supermarkets, gasoline stations, utilities, convenience stores. That allows those businesses to hire more people, who, in turn, spend more money.
The Congressional Budget Office says every $1 spent on unemployment benefits generates up to $1.90 in economic growth. The program is the most effective government policy for generating growth among 11 options the CBO has analyzed.
Mark Zandi, chief economist at Moody's Analytics, puts the bang-for-a-buck figure at $1.61, and a recent Labor Department study estimates it at $2.
If that's the case, then every tax dollar stolen from those that earned it has the effect of $4 removed from the economy.
Unemployment is a form of socialism, and the problem with socialism is that eventually, you run out of other peoples' money.
It tends to discourage some people from earning their keep. The old adage, "why buy the cow when you can get the milk for free?" holds true here. The best think that they can do, if they choose to extend, is to extend at 1/2 pay. That'll motivate a bit.
Sorry, stopped reading right there. Life is too short to waste on ill informed "experts".
Here's CapitalistPig Jonathan Hoenig explaining things, just in the nick of time:
Why not help them (the unemployed) by letting somebody create a job so they don't have to be unemployed anymore? I mean the left has this belief...that somehow redistributing wealth creates more of it. We know that all of the stimuluses before this stimulus hasn't done much to bring down unemployment. And the left honestly believes that government spending is productive. I'm most offended by this notion that somehow if you oppose more unemployment benefits, you're a big jerk. You're some kind of AH because you don't want to have more government redistribution of wealth. I want the economy to succeed and grow but it doesn't happen as government entitlements grow.
From the 11/20/10 Transcript of FoxNews Cashin' In
You and that selfish greedy Jonathan Hoenig miss the point completely. Not only is keeping people on welfare compassionate but it creates jobs because the unemployed spend the welfare checks increasing demand. It doesn't matter if the government raises taxes on the employer, that wont effect his hiring, all he cares about is that the unemployed spend those welfare checks. He only cares about his before-tax profits which is increased by demand, not taxes. It's all about demand. Didn't you ever learn Keynesian Demand-Side economics??
Don't you know the stimulus created or saved 3 million jobs? If only the voters were better ‘educated’ they would understand that Democrats did all the right things and made our lives better. Thank Goodness for Rachael Maddow explaining economics or we would all be lost. She promised us that the stimulus would put America 'back to work' and now she promises this endless welfare will too.
Wonder what’ll happen to them when the dollar becomes fit for nothing but toilet paper.
It won’t be a happy ending.
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