You’ve heard it many, many times from the Left: unemployment checks stimulate the economy. But is that statement factual? Carolina Journal’s Dan Way looks into it and finds that numerous economic reports conclude that extending unemployment benefits discourages people from looking for a job and places the burden on future generations, from whom the money is typically borrowed.
A recent report from the U.S. House Ways and Means Committee by Chairman Dave Camp, R-Mich., and Human Resources subcommittee Chairman Dave Reichert, R-Wash., said that after five years of operation, the emergency unemployment compensation program “has fallen far short of Americans’ expectations.”
According to the committee report, “Instead of being one of the ‘biggest stimuluses,’ as [former] House Democratic leader Nancy Pelosi once said, scholars have suggested that recent extended UI benefits actually contributed to higher unemployment.”
In previous recessions dating back to the 1950s, it was customary for federal policymakers to add 13 to 26 weeks of federal unemployment checks to the 26 weeks of state checks.
But after the 2007-09 recession, maximum weeks of benefits “soared beyond the longstanding norm to a record 99 weeks,” the report said. It also was unprecedented that three-fourths of those weeks were paid entirely with federal funds.
Spending on the federal extended benefits leapt from $20 million in fiscal years 2005-07 to $138.6 billion in fiscal years 2008-10, “an astonishing 692,900 percent increase,” the report said.
Further, recent experience has established “record unemployment benefits don’t necessarily stimulate a robust recovery or the rapid return of the unemployed to work. If they did, the benefits since 2008 would have resulted in an historic economic boom and minimal durations of unemployment,” the report said.
“Unfortunately, the opposite occurred — a historically weak recovery and continued near-record durations of unemployment long after the recession officially ended,” it said.
We must have compassion our friends and relatives who can’t find work. We must — as individuals and through our churches and community groups — help them through the rough times. And we must support public policies that make our state and our nation friendly to the entrepreneurs, investors, and business owners who create jobs. Over the past five to six years, the majority of voters have supported a president who refuses to do so and who believes, instead, that the misery must be shared by taking from the productive and redistributing the resources to the middle class. We must now turn to the states for policies that make the states prosperous again, knowing that federal policies will work against a return to prosperity for at least another three to four years.