Washington extends unemployment benefits, guarantees more losses
From CNN: U.S. job losses have been mounting for months. This month, the Department of Labor reported that the economy lost 240,000 jobs in October, bringing the total number of jobs shed in 2008 to nearly 1.2 million. The unemployment rate rose to 6.5 percent, a 14-year high, last month.
Note that earlier this year we ALREADY extended unemployment link –NY Times. How’d that work out? It lead to increased unemployment. As Reagan and Clinton both discovered, the way to get people off welfare is to REDUCE welfare, not extend it. Here’s how Fox’s John Lott sums it up:
New unemployment claims were flat or falling during the year until early July. The overall unemployment rate had also leveled off at 5.5 percent in June.
Back in September, the writing was already on the wall. Jobless claims after the increase in benefits were higher in all but one week, as compared to the months prior to the July 6 change. Here’s an interesting study, from a Clinton adminstartion member that explains why. The money quote:
We also find that the probability of leaving unemployment (both through recalls and new job finding) increases greatly around the time that UI benefits lapse.
Gosh – people who can’t get government money any more are more likely to get a job? Does it really take an economics degree to figure that out? The calculator team says that for a 50% increase in unemployment benefits, you can expect a 1% increase in the unemployment rate. So what’s Washington’s response? Extend benefits even more.
A quote you may hear from me often: State-sponsored compassion causes pain to everyone involved in the transaction.