According to reports coming from Washington today, the Senate has failed to reach any agreement on extending unemployment benefits. Next week benefits run out for hundreds of thousands of would-be workers and this economy is still not creating jobs. So, as a stopgap, the Senate proposes a “15-day” extension. Yes, you read that right: 15 DAY extension. We have levels of long-term unemployment not seen since the Great Depression, yet Washington cannot figure out how to do something basic. Unemployment benefits are a critical counter-cyclical automatic stabilizer mechanism. Born of the Great Depression, they have proved their value in moderating recessions since (as well as helping those most in need). Now we’re just going to let them expire.
So WLNS Channel 6 came by today to ask what I thought of the 15 day extension. Of course, 15 days is better than zero. But if this all we get and we don’t an longer extension, we’re in trouble. Those folks wanting to control the deficit – forget it. Keeping people unemployed and taking away their spending cash is the way you increase the deficit, not reduce it. Every day the unemployed, especially the long-term unemployed go without jobs we are playing with fire. It’s not just no income for those would-be workers, it’s no sales revenue for the companies and stores they can’t buy from. It’s reduced tax revenue for state, local or fed governments too – thus making the deficit worse. It’s an increase on demand for government services. It’s a waste of potential resources. It’s clear the private sector economy is still not ready, able, or willing to create enough jobs, but in response we get indecision, dithering, and weak proposals from Washington. The consequences could be nasty long-term: see my post here.