The Trouble with Extending Unemployment Insurance Benefits
Last month, President Obama signed yet another extension of federal unemployment insurance benefits. This is the seventh time the leaders in D.C. have extended unemployment insurance benefits since the recession began in 2008.
And there is more to come. This month, Sen. Debbie Stabenow (D-MI) introduced the Americans Want to Work Act. If passed, this act will be the eighth extension of federal unemployment insurance benefits. It will extend the eligibility of unemployment insurance benefits to a record breaking 119 weeks to those living in a state with an unemployment rate at or above 7.5 percent, which includes Washington at 8.9 percent according to the Bureau of Labor Statistics.
Some members of the media are calling this one of the defining issues for the midterm elections since it is another example of an almost strict party line issue that is rife with political ideology.
House Speaker Nancy Pelosi has charged that unemployment benefits are great tools to create jobs. She makes the same argument we have been fed since the outset of democratic power --- let us spend your money out of the recession. Moreover, the argument that the extension of unemployment insurance benefits will create jobs simply fails to consider the fact that unemployment-benefit dollar spending is likely not 'new spending,' thus rendering it another fallacy that it will create jobs.
Republicans came out strongly and argued that the recent $34 billion spent on extending unemployment insurance benefits should come from unused stimulus money or some other source rather than rely on more deficit spending. After all, Speaker Pelosi did tout unemployment-insurance benefits extension as a job creator, which is what we are told the stimulus was as well.
Digging deeper into the issue, some republicans have taken an exception to the theory behind unemployment-insurance benefits. Specifically, they argue that it promotes a disincentive for people to get back to work because they can chose to remain on unemployment while actively passing up a lower paying job. The republicans' argument has a lot of merit and not because Americans are lazy. Quite the contrary, Americans are smart.
It makes sense that a person who worked for, say, Wendy's as a floor manager, elected to forgo the job as a fast food cashier elsewhere because the pay was significantly less. This worker would be making a rational choice staying on unemployment while continuing to look for comparable work. It makes even further sense that the worker, who has always had back problems, files for Social Security Disability benefits because, well, there is no law that precludes one from telling his state he can work while telling the federal government he cannot.
The trouble with extending unemployment insurance benefits is that it is intended to be a six-month short-term fix for families who are struggling. It is not a true stimulus and the government should be reluctant to continue extending it without first finding a way to pay for it. Unemployment-insurance benefits might not precisely disincentivize working like some would argue, but it certainly seems wrong to be paying individuals who are possibly electing not to work while spending and spending our future generations into debt.[[In-content Ad]]