Tuesday, January 7, 2014

Keep The Unemployment Benefit Trough Open?

Should Tax Payers continue to subsidize the Unemployment Insurance system?

Why or why not?  If yes, for how long?

Personally I think it should not be extended...  Let's have these folks move over to the welfare system if they are out of savings, and still being particular regarding their next job. 

CNN Politics at Play
FOX News Bill Clears Senate
PBS Should Benefits be Extended?
WP GOP Reframing Fight
TownHall Dishonesty of DFL
MinnPost Senate Pass Plan


Laurie said...

The Moral Calculus Underlying the Debate Over Unemployment Insurance

I share the liberal point of view. Besides, I don't think it is that easy to get welfare benefits.

John said...

Yes. Liberals do believe in wealth redistribution via the government. Conservatives, not so much so.

So answer the other questions.

How long do we keep this wealth transfer tap open?

How is it different from welfare?

Remember that these are "extra emergency" benefits. They were not "earned" or paid for by the employer. They are truly government welfare / wealth transfer from active tax payers to this group of people.

Why wouldn't we have these people transition to the systems we have in place for low income households?

jerrye92002 said...

The problem with liberals' "moral calculus" is that it isn't good arithmetic. You don't get to ride the moral high horse by stealing from one person to give to another that YOU think is more deserving. Period.

That said, there is something important in the abstract about helping those in need through no fault of their own. The question is, how many of those are there? The answer is in a chart, which I do not have, which shows what happens to the number who find a job over the life of their unemployment benefits. It shows a rapidly decreasing curve, as most people find a job in the first few weeks after unemployment starts. After a few months it settles down to a consistent few, as the long-term unemployed get sidelined, and then, lo and behold, as the benefits start to run out, the curve sweeps sharply upward, with people taking jobs because they can't get further benefits.

So the hypocrisy of these Democrats is so thick you could cut it with a knife. First they put millions out of work with their economic policies, then force them into a welfare system that forces them to stay there or starve. That's not compassion, that's criminal stupidity.

Sean said...

I think we need to extend UI because the labor market still isn't supporting the kind of job growth required to move the long-term unemployed off the sidelines.

When 23,000 people are applying for 600 Walmart jobs at $8.50/hr in some areas, it's not a matter of people refusing to work, but a question of how much work is available.


John said...

Walmart Receives 23,000 Apps

John said...

I kind of thought Liberals may prefer people to get their benefits via the welfare systems, instead of unemployment insurance.

I mean wealth and upper middle class folks can get UI, whereas they can not get welfare. Typical the Liberals seem to want to cut the benefits for those with money. (ie social security/medicare income rules and taxes)

jerrye92002 said...

It is very tempting to be compassionate with Other People's Money, but after 4 years of this "emergency funding" it is far past time to stop sending in rowboats and start patching that big hole in the dam. Remember, Obama promised that if the Stimulus passed the Congress, unemployment would be down to 5% within 2 years, and never go above 8%? Well, here we are 4 years later, and the only reason unemployment is down to an awful 7% is because more people have dropped out of the job market than have found jobs in the Obama economy. If these people were still listed as unemployed, the rate of unemployment would be 11% and the "underemployment" index would be at roughly 16%! How about, instead of further taxing the economy to sustain these handouts, we do something that would take the shackles off the economy and let these people go back to work? No, we're still going in the opposite direction.

It is just frustrating how Obama keeps stepping up to the microphone to "fight for" supposed solutions to the problems he and the Democrats have created, while pretending that he had absolutely nothing to do with any of it. Of course, he can legitimately claim he "didn't know" about all these failures; some of us have long recognized that he doesn't know much of anything.

Sean said...

At the time the stimulus passed Congress, it was thought GDP was contracting at about a 3.5% rate when it in fact was contracting at a 8.9% rate, so of course the Administration's projections were off.

As for the GOP proposals, Josh Barro put it best:


Here's a key excerpt:

"Broadly there are two poverty problems in the United States. One is a cyclical trend: The labor market has been slack for the last five years, leaving many people involuntarily unemployed and limiting workers' ability to bargain for higher wages. The other is secular: Labor's share of national income is declining, wages are rising more slowly for low-skilled workers than high-skilled ones, and rises in family income at the bottom have come primarily through fiscal transfers, not wages.

These problems require different solutions, and Republican ideas don't address either.

On the cyclical side, Republicans favor a variety of policies that would make the unemployed and marginally employed worse off. They want to cut government benefits to the poor: they oppose extension of emergency Unemployment Insurance benefits, they want modest cuts to food stamps, they want to repeal the Medicaid expansion.

Of course, Republicans don't want the poor to live off government benefits; they want them to get jobs. Unfortunately, Republicans also oppose macroeconomic policies to promote full employment, such as deficit spending, infrastructure investment, and monetary stimulus.

The Republican theory seems to be that if the government "just got out of the way" by cutting taxes, spending and regulation, then labor market would magically tighten, people would get jobs, and wages would rise. Empirical evidence for this proposition is lacking.

Tellingly, this "get out of the way" prescription is exactly the same one Republicans offer when the economy is strong. That's because these policies are supposed to boost long-run GDP growth. Even if that is true, that's not a reason to believe they also smooth business cycles, speed economic recovery and reduce unemployment. Whatever the merits of this conservative policy approach in the long-run, it's not designed to address our short-run problems."

jerrye92002 said...

Granted there are two problems: How to keep a safety net operational during the short term while the long-term problem is addressed. From my point of view, leaving the economy moribund and people hurting for 5 years does not constitute a short-term emergency situation, and the fact that this recovery has been the slowest in post-war history tells me that the government's actions have hindered, rather than helped. As for the long term, I think we make a grave mistake in assuming that government actions of most any kind can be beneficial to the economy. The best thing for government to do for the economy is to back up and get out of the way – fewer regulations, lower taxes, fewer incentive-reducing handouts of all kinds, cease the central planning known as crony capitalism and, above all, stop the stupid spending! These huge deficits, debts and unfunded liabilities are already more than even a robust economy can tolerate. Unemployment benefits are drop in the bucket, but tying them to spending reductions is a minimum first step (probably of 12 steps) in the right direction.

Sean said...

Actually, more of the empirical evidence would indicate the government hasn't done enough to get the economy back running again. The GDP gap since 2008 is approaching $10T, and we've replaced it with small potatoes stimulus packages that were designed to be politically palatable instead of economically effective.

There's little evidence that an increased diet of supply-side measures would work to improve economic performance right now. The current problem is a demand problem, and it requires demand-side solutions.

Over the longer term, I agree that we need to rationalize the tax and regulatory code, but we should get the economy moving again now and then worry about the long-term problems.

John said...

Busn Insider Problem with GOP Plan

John said...

Federal Spend

How much more would you have spent? Are you really willing to pass even more debt onto our children.

I mean the Federal spend went from $2,700,000,000,000 in 2007 to $3,500,000,000,000 in 2009. A 30% increase aimed at "stimulating" the economy. Then we exited Iraq, which should have made even more money available to domestically.

Bush and Obama cranked up the spending machine in 2008/2009 and nobody turned it down. Finally after some fiscal restraint forced by the GOP, the spend is staying somewhat flat.

Which means in a year or more we will probably be spending at a rate equivalent to 2008. That is if the DFL stays in check and can not raise spending excessively.

If they are not spending the "extra" money on stimulus, what are they spending it on.

John said...

I mean if inflation was 15% annually this increase may make sense... But it is ~3%...

I find it so frustrating that Liberals like to increase spending "temporarily" to "stimulate" the economy, but they seem to want to consider that the new benchmark as soon as it is increased.

"Oh no... They are trying to "cut" spending!!!" When actually the GOP is just trying remove the extra spend that was supposed to be temporary...

jerrye92002 said...

"...the spend is staying somewhat flat" -- John

No, it's NOT. Federal spending is a runaway train on the road to Perdition. That is why the "penny plan"-- decreasing the federal budget by 1% of actual dollars each year for 5 years, assuming normal economic growth, would balance the budget!

I've heard that argument that the stimulus was too small, and I would argue that it didn't go where it should have to have the most stimulative effect. What I will contend is that government cannot really stimulate the economy by spending money, because it must first take money OUT of the economy to spend it. It is economically "neutral" except that it redirects spending from what taxpayers want and need and would be willing to pay for, including economic growth, with what the Wizards of Washington want to spend it on, for their own unfathomable reasons.

Sean said...

If economic growth remains mediocre, your long-term debt problem gets a lot worse than it already is. You're better off spending money today to prevent a Japanese-style lost decade (although we've already dithered far too long) and get the economy chugging again.

John said...

Did you look at that graph?

Bush and Obama increased the Federal spend by $800,000,000,000 anually to stimulate the economy.

Most of it with borrowed money... How much more did you want to spend? And on what?

If they are not spending that $800,000,000,000 per year plus the savings from stopping 1+ wars, what hole are they dumping it down?

Remember, that is $800 BILLION with a capital B per year...

jerrye92002 said...

"You're better off spending money today to prevent a Japanese-style lost decade..."

It depends on what you mean by "you." Yes, if consumers were spending money and investors were investing and making the economy grow by adding jobs so consumers had more to spend creating more demand, etc., that would be wonderful. Having government take money out of the economy so it cannot be spent or invested, that's the way to keep the economy in the doldrums. It isn't about the amount spent, it's about WHO spends it-- who decides-- and what it is spent ON. There has to be a balance between consumption and investment, and government cannot do that properly because of the very real constraints of politics and of reality. Government cannot help the economy by much, but they can hinder it a great deal.

Sean said...

You have to look at what's driving that spending, though. $200B is increased Social Security payments as the Baby Boomers begin to retire. $130B is increased "welfare" payments due to the economic downturn. $90B is increased Medicaid and health care programs -- also largely driven by the economic downturn. The decrease in costs in Iraq/Afghanistan ($100B) are swallowed up by increases in other defense and veterans programs.

Levels of truly discretionary spending are falling, and are already nearly 2% lower as a % of GDP than the average for the last 50 years.

John said...

You make a very good case for proactively addressing the "entitlements" problem. Yet the Democrats refuse to even discuss it.

Politicians over promised and now we need to adjust the outlays (ie benefits) to be aligned with what was contributed (ie premiums) and what will be contributed. Or we need to raise the premiums...

Paying off the SS/Medicare Bonds is one thing, but when they are gone. Those systems officially become a version of welfare.

What new military spending are you thinking of?

Source regarding the 2% lower statement?

John said...

Pages 14 and 16 of this report have some interesting data.
FAS Discretionary Spending

It does look like those entitlements are going to overwhelm us like a tidal wave... Maybe if we just ignore it, it will disappear...

Let's keep praying that interest rates don't go up, or then it will be servicing the debt that drowns us.

So many opportunities...

John said...

The conclusions on page 33 pretty much say it all.

Sean said...

President Obama is the one who has offered a "grand bargain" on many of these issues, not Republicans.

As for entitlements, if it's such a crisis, then we should be willing to make today's seniors share in the pain.

jerrye92002 said...

"President Obama is the one who has offered a "grand bargain" on many of these issues, not Republicans."

At least Republicans weren't d**n fools enough to believe him.

John said...

CNN Update