Extending Unemployment

The next few weeks will be crucial for the five million Americans who have been out of work for more than 26 weeks collecting unemployment.  That's because federal unemployment extension benefits expire on November 30, and many lawmakers are opposed to extended the benefits further.

Most states provide unemployment benefits of up to 26 weeks.  As it has in previous recessions, the federal government provided funding to extend benefits up to a year.  The government has never stopped funding these type of extensions when the jobless rate was this high -- 9.6%.  Yet many politicians are clamoring to do just that, claiming that we should not increase the deficit without spending cuts to offset the cost of the extension.

One of the rich ironies of politics these days is the spectable of lawmakers pimping for tax cuts for the super-rich while at the same time opposing an extention in unemployment benefits on the ground that it would contribute to the deficit.  After all, extending unemployment benefits for an additional year would cost about 6 to 7 billion per month, or around 72 billion.  That's less than extending the Bush tax cuts for the wealthy for two years. 

While the dollar amount for these two policies is roughly the same, the economic effect is not. It is estimated that every dollar spent on unemployment insurance generates $1.60 in spending activity.  Unemployment insurance, in other words, is a stimulus to the economy.  Tax cuts for the rich, on the other hand, do nothing to stimulate the economy -- unless, like believing in the tooth fairy, one believes in the trickle down theory of wealth creation.  It seems obvious to me that cutting unemployment off a few weeks before Christmas is going to hurt, not help the economy.

But don't unemployment benefits discourage people from working?  That argument has been made, and there may be something to it.  Some people, for sure, would prefer to collect unemployment than take a job they don't really care to do.  However, the vast majority of people on unemployment are there becaure there are no jobs for them to take in this "jobless recovery."

There are only six more working days for Congress to pass the unemployment extension.  Several groups are sponsoring call ins to get people to call their Senators in support of the extension.  Call yours today toll-free at  1-866-606-1189 or 1-877-662-2889 and tell him or her to do the right thing