Extending jobless benefits has passed the Senate now (by one vote) after some tack-ons were tacked off and some RINOs decided to vote for it. Most Republicans were against the bill because it uses borrowing to pay for the benefits and they wanted to cut spending in other places, instead. The Democrats think this is going to help the economy:
"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."
Right. We discussed yesterday why this isn't so.
And today the Wall Street Journal expounds on that in an unsigned editorial.
Mr. Obama was nonetheless obliged to concede that, 18 months after his $862 billion stimulus, there are still five job seekers for every job opening and that 2.5 million Americans will soon run out of unemployment benefits. What happens when the 99 weeks of benefits run out? Will the President demand that they be extended to three years, or four?
And extending jobless benefits causes unemployment. How's that? Well, if you want more of something, subsidize it. If you want less, tax it. (So why do we tax prosperity and subsidize poverty?) And unemployment benefits subsidize unemployment:
A March 2010 economic report by Michael Feroli of J.P. Morgan Chase examined several studies and concluded that "lengthened availability of jobless benefits has raised the unemployment rate by 1.5% points."
A 2006 NBER study by Raj Chetty of UC Berkeley on a related subject begins, "It is well known that unemployment benefits raise unemployment durations."
Add to it that it will increase the debt and you have a recipe for a slower recovery and more unemployment. But that's Obamanomics for you: a slow, painful economy and masses of debt.
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