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Could unemployment insurance reduce the deficit?

Sara Murray makes the case:

Once older workers are laid off they take the longest to find new jobs. For workers 65 and up, it takes a median of 45.1 weeks to find a new gig. For those 55 to 64, 38.7 weeks. It takes a slightly shorter 30.4 weeks for those who are 45 to 54-years old.

Unemployment checks have the added benefit of helping these people feel like they’re still a part of the labor force. When the checks run out, and with few glimmers of hope in their job searches, they’re more likely to drop out of the labor force and turn to a program like disability ... studies have shown that for each percentage point increase in the unemployment rate, disability rolls increase anywhere from 2% to 7%. Some studies show that effect grows larger in the following two years.

By Ezra Klein  |  July 7, 2010; 11:40 AM ET
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Nancy Pelosi's little marionette?

Gosh Mr Klein, if the goal is to make people actually feel like part of the labor force there are few things that would work better than a job.

or have you lost your grip on the obvious?

Posted by: skipsailing28 | July 7, 2010 12:03 PM | Report abuse


Maybe you should take it up with the Republicans in the Senate who won't let job proposals even come up for a vote.

But you've repeatedly demonstrated you know little about anything - you're just a good little talking point droid.

Posted by: lol-lol | July 7, 2010 12:28 PM | Report abuse

i'm surprised this case isn't presented more often. it makes intuitive sense, especially in the #davidbrooksian psychological realism view of things.

and it's not like everyone qualifies for those unemployment checks

Posted by: jackjudge4000yahoocom | July 7, 2010 12:32 PM | Report abuse

Would extending unemployment benefits help the economy, and thus the deficit in the long run?
Which is why senate Republicans are so opposed. The slower the recovery, the easier it is to run on "This is Obama's recession."

Posted by: F_L_Palmer | July 7, 2010 12:44 PM | Report abuse

The pundits and policymakers continue to focus public attention on extending unemployment benefits while the economy continues to sputter. Treating the symptom is preferable or more politically expedient than curing the disease.

Posted by: tuber | July 7, 2010 12:56 PM | Report abuse

Conservatives don't think the government can create jobs, but blame Obama for not creating jobs.

In reality, banks and corporations are sitting on great hoards of cash and they are concerned about spending it because, they claim, there is too much uncertainty about new regulations, tax hikes, health care etc. There is also a dearth of demand because consumers DON'T have great hoards of cash, they have mountains of debt from the bubble years when they were told to go into debt to consume.

This mismatch between the cash hoarders and those without sufficient money means that there is no domestic demand for the stuff that business might produce, and so no jobs for people who then might have the money to spend which might mean more jobs.

We obviously aren't going to get back to the levels of cunsumption that were enjoyed in 2006-2008, because that was unsustainable. But it doesn't take a PhD to see that we need to do something to increase demand and business has to stop expecting that everything will be arranged to their satisfaction before they start lending and producing because they aren't going to be able to go back to 2007-8 levels of consumption either.

All of which is by way of saying that Ezra is right, we need unemployment benefit extension and aid to the states to keep a minimal level of demand going, and unless we grow we won't be able to do anything about the long-term debt.

If the private sector is the key it had damn well better get going or the economy will never get off the floor.

Posted by: Mimikatz | July 7, 2010 1:07 PM | Report abuse

got the full on whining thing going on it seems.

Wasn't the stimulus supposed to work? How about the bail out? Aquisition of major industries?

It is the height of folly to point to the opposition and say, "Our ideas won't work because you won't let us spend trillions more!"

You've got a majority, go for it girl.

Posted by: skipsailing28 | July 7, 2010 1:36 PM | Report abuse

well this is insightful:
Conservatives don't think the government can create jobs, but blame Obama for not creating jobs.


Exactly. The government's job is to protect the citizens from enemies, foreign and domestic and stay out of the way. As you rightly point out, the cash is standing on the sidelines waiting for clear signals.

Now you are demanding that businesses abandon prudence and throw thier money away to prop up the failed policies of the liberals.

not gonna happen. The market won't lie to you and it is telling you that right now investment is not going to create a return. therefore, no investment.

As for jobs, well IMHO obamacare is the killer here. Who wants to hire a headache? Infact many small (as in micro) businesses I know have actually shed staff. Been to the doctor lately? Certainly they are not in a hiring mood.

Posted by: skipsailing28 | July 7, 2010 1:43 PM | Report abuse

Hmmm... Yesterday my neighbor mentioned his unemployment ran out, and now he might try to get disability. His back is quite messed up and he probably will qualify for it, but I know he'd take a job if he could get one.

Posted by: Hazelite | July 7, 2010 2:13 PM | Report abuse

For those that are still confused about UI and what extensions are, here is the best graphical explanation I have found. It also drives home why Congressional action is so badly needed to extend filing deadlines:

Posted by: beellinor | July 7, 2010 2:45 PM | Report abuse

"The market won't lie to you and it is telling you that right now investment is not going to create a return. therefore, no investment."

SS28, while all for crushing unions for striking or threatening to strike has no problem with the massive capital strike banks and other companies are engaging in.

"It is the height of folly to point to the opposition and say, "Our ideas won't work because you won't let us spend trillions more!""

In fact, the stimulus did work reducing unemployment by 2-3% over most projections of a non stimulus economy. The Obama administration's mistake was not realizing how bad the economy was and set the unemployment bar too low (8%) and proposed a stimulus that was way to small. If the stimulus was 1.5 trillion instead of ~300 billion (the amount of the stimulus that actually went directly to jobs, as opposed to tax cuts and direct aid to states) we could well be below 8% unemployment now.

Every time I hear someone like ss28 say the stimulus didn't work, I feel the need to point out these obvious facts. Not that it will keep ss28 from regurgitating the same tired rightwingnut talking points again...

Posted by: srw3 | July 7, 2010 3:21 PM | Report abuse

Ezra, if you really want to be a ‘wonk’ why don’t you explain to the good people who read your column that the President and Democrats hold a disproportionate share of the blame for our financial meltdown, for the insuring recession, and for the giant sucking sound of jobs moving overseas.

Consider that Bush (and Clinton) asked repeatedly for stricter regulation of Fannie and Freddie. Instead Barney Frank and Senator Obama voted AGAINST increased oversight of Fannie and Freddie, and instead repeated that there was no risk to housing. Democrats continued to demand that loans be made to people who were unable to repay them and completely ignored the issue of credit default swaps. This is DEMOCRATIC policy that caused our current economic collapse.

With respect to our current recession and our current loss of jobs. Any real economist will tell you that economic decisions are made (hiring, spending, investing) based on the expectation of FUTURE economic conditions. Repeatedly you give Obama a pass when he says that he “inherited” these economic problems. Instead the recession was precipitated in January of 2008 by both the mortgage mess explained above, and by the EXPECTATION that Obama would win and that he would try to implement a bunch of misguided regulation and taxes that would kill business.

Since January of 2008, business and consumers have been on strike refusing to spend, invest or create jobs; it was that long ago when it became clear to all that Obamacare, cap-and-tax, card check, the theft of wealth from GM and Chrysler bondholders would make investing and creating jobs much more expensive and would sharply reduce the potential payoff and increase the risk of investing or hiring.

Any real ‘wonk’ would make these facts clear to their dear readers, otherwise you are acting as no more than a demagogue!

Posted by: ELF2 | July 7, 2010 4:41 PM | Report abuse

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