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The Spectacle Blog
Congress remains mired in a bitter fight over extending the cut in the Social Security payroll tax rate. It’s fun watching Democrats push a two percent reduction after demonizing President George W. Bush for wanting to let workers put that same two percent into a private investment account. So much for being concerned about the “integrity” of Social Security!
Another part of the bill would extend unemployment insurance. My Cato Institute colleague Chris Edwards explains why this is bad policy:
any stimulus from UI benefits will be counteracted by the anti-stimulus of the higher taxes needed to pay for them. Many states have been raising their UI taxes on businesses in order to replenish their unemployment funds, and these tax increases are surely harming job creation.
Another negative effect of UI benefits is that they increase unemployment because they reduce the incentive for people to find work. Higher UI benefits delay the need for people to make tough choices about their careers, such as switching industries, taking lower pay, or moving to a different city. It’s a basic rule that when the government subsidizes something, we get more of it.
Leave it to Congress to create more long-term problems with every step they take trying to deal with the economy. This may be the most important argument on behalf of a policy of laissez faire. Private markets are far from perfect. But politicians always in every case make a bigger mess of things!
David W| 12.19.11 @ 8:15AM
Come on, how can you be against unemployment insurance? Didn't the genius of California, Nancy Pelosi, state that the unemployment insurance would create 600,000 jobs? There must be some disconnect here (I think it would be between Nancy's ears).
Stephen Barlow| 12.26.11 @ 5:32AM
Are yu SURE that is what she said?
bill| 12.19.11 @ 8:30AM
Majority of people, who are taking the unemployment checks, are joining the OWS mobs, and that is unproductive and offensive to our nation. This is the worst way wasting our tax payers money in the drain. Let those unemployed get a job, or no free money.
Stephen Barlow| 12.26.11 @ 5:33AM
WHAT jobs?
Dai Alanye | 12.19.11 @ 8:45AM
Unemployment will be extended because Obama is making a big deal of it, and will club the Repubs with the failure to do so. The House is smart enough to tie Keystone and a few other matters to it so as to mitigate its harm. Anyone who hates this sort of logrolling had better work not only for a Repub President but Senate this coming fall.
Al Adab| 12.19.11 @ 2:03PM
The Dems two favorite handouts anre unemployment and minimum wage. Never mind the facts about either they play well with the voters. Which is a short way of saying the GOP has to eat garbage to get the tax cut extension and BTW repeal the CFL mandate. If only non-germain riders were excluded; all these idiot matters would have to stand or fall on their questionable merits.
Spudmom| 12.19.11 @ 9:43AM
All government benefits for the poor (except those for the elderly) should gradually decrease over time, so as to encourage those receiving them to get their act together and feel a sense of urgency in their efforts at self-improvement. Like weaning a baby, it may be painful, but better off in the long run.
Stephen Barlow| 12.26.11 @ 5:31AM
In a normal welfare circumstance... but this is the middle of a very dark, long, slow growing tunnel of recession that may take a decade to unlegislate out of. Are these citizens responsible for the Federal mismanagement of financial markets? Are they responsible for wars and wealthy tax cuts creating a deficit economy?
So WHY should they be victimized by more Republican policy? Without the New Deal, America might not have been in a position to win WWII all by itself.
Oldefarte| 12.19.11 @ 9:57AM
Of course unemployment benefits are a negative on the economy, since they as stated are governmental welfare [and as such disincentify those recipients to seek employment, especially that which results in less income than that received from the non-work required unemployment benefit]. Our governmental/socialistic welfare system is extremely detrimental to our economic benefit in many more ways than this specific issue. Generally, when people are disincentified to seek work related income opportunities, they lose the work ethic of old. The monetary amount of one's income should not be the determining factor into whether or not one actually physically works/labors for their received income. It whould sole result fro the joy of working for one's financial living. The pride of work should predominate, and governmental welfare purposely takes that away from individuals and forces their resultant dependency upon the government [who can/will thereafter remind those welfare recipients that they owe their welfare grantors their votes in return for same....and those votes are usually directed at Democratic Party candidates as their grantors]. If this country is ever to get back to a solid economic/financial footing, governmental welfare of all varieties must be eliminated and/or converted into WORKFARE!!!!!!!!!!!!
Al Adab| 12.19.11 @ 3:20PM
Don't overlook that the GOP snuck in that pipeline matter as well. Eat that DEMS.
Stephen Barlow| 12.26.11 @ 5:27AM
SO, first it's no federal jobs, then it's no payroll tax commitment, now repealing 3/4 of a year of UI benefits because raising revenue in a deficit crisis economy is NOT OK if it means tapping the wealthy.
I suppose tapping the poor, who are tapped out enough to need UI benefits and have no job prospects in this country would be a wiser course of action?