Wednesday, January 8, 2014

Enough is Enough: No New Unemployment Insurance Extension

By Diana Furchtgott-Roth (former chief economist at the U.S. Department of Labor)

In his weekly video address and in a speech at the White House on Tuesday, President Obama called on Congress to extend federal emergency unemployment insurance benefits, which expired at the end of 2013.

During the recession the federal government funded the expansion of unemployment insurance benefits to 99 weeks, then 73 weeks, until the end of December.

Without congressional action, the unemployed get 26 weeks of benefits, paid by state unemployment insurance funds to which employed workers and their employers contribute.

The Congressional Budget Office estimates that extending the benefits through 2014 would cost $26 billion. Despite — or perhaps because of — last month’s budget fights, neither Obama nor congressional supporters of the increase have proposed a way of paying for the extension.

Many economists, including two former Obama economic advisers, Princeton professor Alan Krueger and Harvard professor Larry Summers, have written that extending benefits increases unemployment. The longer the duration of unemployment benefits, the longer people stay out of work.

Research shows that the unemployed turn down lower-paying jobs even though they are losing job skills from remaining out of the labor force. The longer they are out of work, the more their skills atrophy. It is a vicious cycle leading to more long-term unemployment.

Obama should listen to his former advisers.

Read the rest here.


  1. This President is a Populist so don't expect him to ever make a hard choice when it comes to stuff like this. You could show him economic study after study that extending the benefit period duration actually hurts the unemployed in the long run, and he will ignore you because that would require him to lead and make a tough unpopular choice. Giving people free stuff and making them totally dependent on the government for their well being, is all he has to offer. Even my 12yo could do that.

    1. I would assume This anonymous has never been unemployed for any length of time. My unemployment benefits have been cut however could this possibly be fair when I have worked full time since I was 18....for 34 consecutive years. It its not like I have not been looking for a job...But I have no choice in how I could possibly take a job that pays minimum wage or only slightly more when my childcare is more expensive than that at least when I'm not working I don't have daycare except for the occasional babysitter for the job interviews I've attended

  2. The President is just looking for the moron vote a.k.a. the majority vote. He knows what he is doing.

  3. Funds With $100 Billion May Be Too Big to Fail, FSB Says

    Investment funds that manage more than $100 billion in assets may be labeled too big to fail, global regulators said, as they seek to expand financial safeguards beyond banks and insurers.

    Hedge funds with trading activities exceeding a set value of $400 billion to $600 billion would also be assessed by national authorities to gauge whether they need extra rules because their collapse could spark a crisis, the Financial Stability Board said in a statement yesterday.

    The report addresses “the risks to global financial stability and economic stability posed by the disorderly failure of financial institutions other than banks and insurers,” Mark Carney, Bank of England governor and FSB chairman, said in the statement. “They are integral to solving the problem of financial institutions that are too big to fail.”

  4. Haha what nonsense website is this? "Many economists have written... xyz"; sure. Unfortunately, the economic truth is that UI benefits increase real GDP by more than they cost, so whatever the underlying reality, UI benefits are a net positive to society.