Subsidizing Unemployment

April 21, 2010

Coincidently or not, President Obama signed a further extension to unemployment benefits on April 15, Tax Day — a move that will cost more tax money. The bill extended some individuals’ benefits to a whopping total of 99 weeks (quick math: That’s nearly two years).

Though initial state unemployment benefits are funded through taxes on employers, federal extensions like this one are funded by the U.S. Treasury (read more details here). Translation: taxpayers are on the hook for subsidizing more weeks of unemployment checks for millions of Americans.

Though earlier this year, the idea of “paygo,” paying for new spending as it is voted on, was agreed on, The New York Times notes the following:¬†

… the Senate resolved a stubborn (emphasis added) impasse, deciding the $18 billion cost of the measure could be added to the deficit.

Since when is insisting on actually paying your bills considered “stubborn”? Since politicians decided they could win votes by making more individuals dependent on government subsidization.

And all of this has been done despite the earlier view of one of Obama’s chief economic advisors that unemployment insurance is an actual¬†cause of long-term unemployment. In writing on the causes of long-term unemployment, that advisor, Lawrence Summers, observed the following:

Read the rest of this entry »