Tuesday, November 30, 2010
Unemployment Benefits Set to Expire
This week Congress must decide whether to let unemployment benefits expire for millions of people jobless for over six months. Analysts predict that if they do not extend the aid offered, it will have severe economic impacts in terms of consumption and growth from this sector. Predictions include a decrease in annual economic growth of .5%-1% and a loss of up to 1 million more jobs. The average weekly payment for the roughly 8.5 million people receiving unemployment benefits is $302.90.The CBO estimates that every $1 spent on unemployment benefits generates $1.90 in economic growth (a beautiful example of the government multiplier). Those who have been jobless for more than six months generally have very little savings remaining, so all of the money spent gets put directly back into the economy in the form of consumption. What do you think? Is the money the government will save more impactful than the money the unemployed will lose? Which will benefit the US economy more - focusing on lowering the debt or increasing consumption?
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3 comments:
I'm not sure...I think that there are probably other things that could be cut (lowering the deficit) before we cut unemployment benefits which people are relying on. I don't think that unemployment benefits should be a long term solution. I think a more productive way to spend this money would be putting it toward generating jobs, but I am at a loss of what this would be.
This is outrageous and absurd. People complain about economic growth and that people are not spending enough and now Congress let Unemployment Benefits expire? These unemployed people have no money and of course the $300 they receive every week through Unemployment Benefits will be spend and be put back in the economy. How does that make any sense that there are people in Congress fight for rich people and cut the only source of funding of the poor?
I would agree with both of your comments. This is money that ends up going directly back into the economy, whereas government spending on things like defense or tax cuts for the wealthy rarely ends up contributing to GDP growth. It seems the government is attempting to cut the budget while circumventing the real issues.
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