Unemployment Benefits: Good or Unnecessary?

A couple of segments from “The Colbert Report” with Paul Krugman discussing unemployment and the economic crisis. In the first, he sums up the need to extend the unemployment benefits for the long-term unemployed quite plainly:

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This one from a year ago, discussing the stimulus and its effects:

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There’s a lot of debate about whether or not Congress should extend benefits to the long-term unemployed. There are a couple of points that I would like to highlight:

1) As Colbert and Krugman point out, extending benefits will add less than 1/4 of one percent to the national debt. It’s a rather insignificant amount when you consider the crisis. And adding that much to the debt will not kill us. It will only slightly delay our ability to turn around and begin to whittle the debt down. So on the surface, it looks like a bad idea–enlarging the debt and all. But when you look deeper and examine the effects of paying or not paying the benefits, it becomes clear that by not extending benefits, it will almost surely further plunge our economy into crisis and send unemployment numbers skyrocketing again.

2) “Trickle Down Economics,” or extending tax breaks to the very wealthy, doesn’t work. It only serves to make the rich richer. It doesn’t do anything to create more jobs or stimulate economic growth. As Krugman points out, if you give a wealthy individual tax breaks, they’ll likely save most of it–they’ll put it in their pockets and not spend it. There is no incentive for them to do anything with their new-found windfall.

But by putting money in the hands of people who desperately need it, you continue to stimulate demand, which ultimately stimulates the economy. Eventually, the economy will start to expand from there. Otherwise, by cutting demand, the economy will contract again, and more jobs will be shed and more people will be out of work.

Relying strictly on private industry isn’t the answer. They need government’s help to stimulate demand and create jobs. And when the financial markets are all but frozen, small businesses don’t have access to the capital they need just to function. Certain tax incentives might help some, but not nearly enough.

So a message to Republicans: Stop hindering our economic recovery and get in the game! If you don’t like what’s being offered, then offer something new. More of the same old stale ideas that gave us this meltdown in the first place is a non-starter. Either get to work for your constituents, or leave public office and get to work for corporate interests. You choose, because right now playing both sides of the fence is only further devastating our economy.

EDIT: Jon Stewart with economist Nouriel Roubini:

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Faux News and the Repubs are just plain wrong.


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