James Hamilton at Econbrowser summarizes my thoughts too:
Extending unemployment benefits
Here I make two quick observations on the policies being discussed.
The first point has been widely noted, but it bears repeating since I keep hearing comments from people who seem to be unaware of it. When you hear that current unemployment benefits can in some cases be collected for up to 99 weeks, and that Congress is discussing an extension of this program, it is perhaps natural to think this means that some people might be eligible for longer than 99 weeks. But this is not the case. Instead what is being discussed is whether the current limits will be kept in place for another two years or whether the limits will be decreased immediately.
The second point to which I’d like to call attention has also been around awhile, but is appropriately still being discussed (e.g., Calculated Risk, Washington Post). The source appears to be these observations made by Wal-Mart CEO Bill Simon in September:
And you need not go further than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when electronic– government electronic benefits cards get activated and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.
And if you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they’ve been waiting for it. Otherwise, we are open 24 hours — come at 5 a.m., come at 7 a.m., come at 10 a.m. But if you are there at midnight, you are there for a reason.
One thing you might take away from such accounts is that the spending multiplier out of compensation for the unemployed is pretty high.
Money spent on unemployment benefits gets into the economy as spending immediately. Let’s face it, midnight of the day benefits are payable is about as fast it can get. It’s also evidence that the benefits from last month are totally spent and gone. That’s economic stimulus. Tax cuts for millionaires are not high-payback stimulus. They don’t fully get spent. And they don’t get spent very fast.