Simply continue to pay people not to work.
So the federal government is going to spend money it doesn’t have to give to people for doing nothing. How exactly does that encourage economic recovery?
“This bill is about jobs because unemployment insurance goes to people who will spend it immediately,” said Sen. Max Baucus, D-Mont. “That would increase economic demand. And that would help support our fragile economic recovery.”
Ah yes, politicians still blindly adhere to the crude, oversimplified fallacy of government spending to prop up aggregate demand, i.e. consumer spending. I addressed that fallacy here. A drop in consumer spending is the result of, not the cause of, economic recessions. Therefore, propping up consumer spending does not address the true problem and will only make things worse.
But these out-of-work people need a lifeline to pay their bills!
said Pennsylvania Secretary of Labor and Industry Sandi Vito. “Folks need this money for their mortgages, for food, and so our goal is to get them their payments as quickly as possible.”
But rather than attempting to “get them their payments,” how about encouraging recovery so that these folks can find work “as quickly as possible”? There is a trade-off here: more government dependency, or more rapid economic recovery and jobs. In an election year, politicians are all-too happy to make people more dependent upon them.
On a related note, the state of North Carolina already owes the federal government $2.2 billion (and growing) in loans the feds extended to NC in order to cover unemployment benefits. Where will the state get the money to repay that loan? The total amount collected in unemployment insurance taxes for the previous year in NC (May 09 to May 10) amounted to $945 million.
The potential hike in UI tax rates facing NC businesses to pay back this federal loan would have devastating effects on job growth.
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