Originally Posted by jimmac
I especially like 3, 4, and 5.
She makes a good number of points.
Sorry if you didn't like them.
As might be expected the WP is not interested in presenting a fully balanced perspective on unemployment benefits, but in serving as a transmission belt for the DNC - much as Pravda provided the views of the official Communist Party Centeral Committee. Hence, one has to view an article with great skepticism but not necessarily constant cynicism...even Pravda was right occasionally (I found its weather forecasts to be rather accurate).
Anyway, here is a different view from economist and policy guru Kieth Hennessey:
1. It is true that empirical studies tend to support the notion that UI (unemployment insurance) has a modest effect on the unemployment rate. The San Francisco fed estimates that the unemployment rate would be .4 percent lower without unemployment extensions. Some estimates provided to economist Kieth Hennessey suggests the the effect ranges from .5 to 1 percent. Although a modest effect might seem counter-intuitive (after all, the government is paying people not to work) and might fail to measure the effect of in the reduction of labor mobility (why move from Detroit if your state is paying you to stay?) it is the best data we have.
But what the article does not tell you is that it means (at best) that for every 8 workers that can't get work, there is 1 who is unemployed because he/she wants to draw benefits. And if the the highest estimate is correct, then that means only 3.5 workers need unemploment to very worker who is unemployed to keep the benefits. And as the unemployment rate drops, the ratio of those in actual need to those loafing decrease - somewhere there is a point where benefits must end.,,especially for a program that proivdes TWO years of unemployment.
I'll enumerate and quote directly his other points:
2. The fiscal stimulus argument in favor of extending UI benefits is silly. The numbers are too small. The pending legislation would spend $33 B over the next year on UI benefits. In a $14+ trillion economy, that’s less than one-quarter of one percent of GDP. When you’re running a 10% deficit, another 0.2% is not meaningful. Sure you can argue that “every little bit helps,” and yes the unemployed are likely to spend almost all of the assistance they receive. But the reason to extend benefits is to help those people who would receive them, not because the cash will significantly accelerate economic growth and benefit everyone else. If this $33 B of spending were concentrated into a month or two it might be barely big enough to register, but it would be spread out over the next year. $3 B per month is a lot of money, but not when compared to a $1+ trillion per month economy.
3. While a few Congressional Republicans are arguing that UI benefits should not be extended, the overwhelming majority are for an extension as long as the deficit impact is offset. The $33 B deficit increase could be offset immediately by other spending cuts or tax increases. For those who ignored my last point (too small to matter from a macro fiscal stimulus perspective), you could easily offset the $33 B by enacting changes now that would reduce spending by $33 B beginning three or four years from now. This eliminates the “contractionary” excuse for not offsetting the spending increase.
There is overwhelming bipartisan supermajority support for a UI extension if it is offset. Speaker Pelosi and Leader Reid chose not to follow this path, presumably because it would split their side of the aisle. They instead chose a partisan route that resulted in partisan stalemate, and we are now in the midst of a traditional blame game. Do not be fooled into thinking this is a debate about whether to extend UI benefits. It is instead a debate about whether that increased spending should be offset by spending cuts or instead increase the deficit.