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Tag Archives: Unemployment benefits

Do Politicians Understand What “Stimulus” Means? I Think Not.

Is it so difficult that the idea behind a “stimulus” package, or “stimulus” spending, or “stimulus” funding would be to stimulate the economy via job creation?  Somehow, politicians aren’t getting this.  The suggestions made by them aren’t ones that include a job multiplying effect.  In other words, for stimulus to be effective, it has to go towards something that creates a job, which directly creates a need for additional jobs, and so on.

Earlier this week, during a press conference, White House press secretary Jay Carney was asked how extending unemployment benefits creates jobs.  His reply?

“There are few other ways that can directly put money into the economy than applying unemployment insurance,” Carney said.

Carney answers the question: “It is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get. They’re not going to save it, they’re going to spend it. And with unemployment insurance, that way, the money goes directly back into the economy, dollar for dollar virtually.”

This is similar to a comment made by former Speaker of the House Rep. Nancy Pelosi:

Economists will tell you this money is spent quickly. It injects demand into the economy, and is job creating. It creates jobs faster than almost any other initiative you can name because, again, it is money that is needed for families to survive, and it is spent. So it has a double benefit. It helps those who have lost their jobs, but it also is a job creator.

Back when Pelosi made the comment, as you can see from the feedback on the Media Matters page, they were more than happy to show how economists backed up what she said, while right-leaning critics were going nuts and criticizing her.

Regardless of the economists that affirmed her statement (and even the CBO), we can now agree that the assertion was wrong.

Maybe I’m out in left field here, but I am willing to wager that the majority of people who are collecting unemployment benefits are spending the money on necessities–food, power, gas, phone, ect.  While the money is technically going into the economy, its not going in for things that will create more jobs.  Listening to Carney, Pelosi, and those who agree with them, it’s as if the unemployment benefits are disposable income.  Paying the bills is not a job multiplier.

Likewise, the expressed opinion of the Left is that the stimulus was a success.  Even a CBO report says that it had some success. From Factcheck.org:

As we have written before, the nonpartisan Congressional Budget Office released a report in August that said the stimulus bill has “[l]owered the unemployment rate by between 0.7 percentage points and 1.8 percentage points” and “[i]ncreased the number of people employed by between 1.4 million and 3.3 million.”

Simply put, more people would be unemployed if not for the stimulus bill. The exact number of jobs created and saved is difficult to estimate, but nonpartisan economists say there’s no doubt that the number is positive.

But the key words are “created and saved.” Many of the jobs that received stimulus money were to maintain exisiting positions, not create new ones. Much of the money went to states to help prevent them from firing government workers. Not to mention, as the President himself said not too long ago, some of the shovel-ready jobs were “not so shovel-ready.” (Sidenote: he chuckled after cracking this joke. Looking at the cost of the stimulus, and how those shovel-ready projects were talked about ad nauseum to get the bill passed, its not very funny.) Again, in the end, for the section of the stimulus intended to create jobs and stimulate the economy, based on the unemployment rate since then, there was no multiplier effect.

So, with calls coming for another stimulus, we should be afraid.  Be very afraid.

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Politicians: Let’s wait to avoid the political fallout

United States Capitol in daylight

Image via Wikipedia

One would think that politicians in Congress would think it normal to work all the time.  But it seems that there is usually a good excuse to be used every election year:  wait until after the election to avoid fallout.

What?  Are you serious?

I along with many other people believe in a saying that goes:  “what’s a politician’s primary job?  To get reelected!”  Now, maybe it’s that I don’t understand the game, or wouldn’t want to be a player in the game, or just think the game is stupid.  But to me, if I’m in congress to get things done and represent the people, then I should be constantly working on the important legislation of the day, and letting the chips fall where they may.  But let’s look at how the waiting game has been played by looking at the current lame-duck session.

In the last few weeks, there have been votes on bills to extend current tax rates, dont’ ask don’t tell, and the extention of unemployment benefits.  While some politicians (namely Dems) said before the election that they “didn’t have the votes needed to pass (insert legislation here)” before the election, other politicians went on record condemning the action.

Quite frankly, the entire “we have to pass it now or the unemployed will lose their benefits and everyone will get a tax increase” drama was unnecessary.  Regardless of what we heard in the media, are we to believe that there was seriously a concerted effort to hammer out those issues before the election?  I think not.  Both sides sensed blood in the water, and for the side in danger, they didn’t want to put themselves in a worse position.  Don’t want to do anything that might jeopardize the free access to the Congressional spa, do we?