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  • Pelosi: Unemployment Benefits Biggest Stimulus for Economy

    Last week in a legislative briefing Speaker of the House Nancy Pelosi (D–CA) stoked the unemployment insurance (UI) debate by stating that unemployment checks are the fastest way to create jobs.

    Let me say that unemployment insurance… is one of the biggest stimuluses (sic) to our economy. Economists will tell you, this money is spent quickly. It injects demand into the economy, and it’s job creating. It creates jobs faster than almost any other initiative you can name.

    Given that a similar debate over extending federal unemployment benefits may also be brewing in the U.S. Senate, the negative effects of such legislation can’t be ignored. As noted by William Beach, Director of the Center of Data Analysis at The Heritage Foundation, extending benefits over the 26 week mark:

    Changes the behavior of people who are unemployed. They don’t look for work as much as they otherwise would be. If you have got that 26th week looming ahead of you, all the academic studies show that you go out and you really begin to make an active job search.

    While Conservatives believe that temporary unemployment benefits are needed, extending the benefits up to 99 weeks, as proposed by some on the Left, would clearly come with a major economic cost.

    Speaker Pelosi also stated that UI injects demand into the economy, because struggling families spend, rather than safe, the money they receive. However, academic research shows that only 55 cents of every $1 in benefits gets spent, as unemployment benefits discourage spousal work. Unemployment benefits have been handed out for two years now and there still remains a jobs deficit of 7.4 million.

    According to Heritage Foundation Senior Fellow J.D. Foster, the Obama Administration has failed to create jobs because their assumption that deficit spending can increase demand in an economy is wrong. As Foster notes, the answers for job creation are simple: “Obama should call on Congress to forego all tax hikes,” and “get busy reversing the federal spending surge to get the budget deficit under control.”

    James Falkner is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Economics [slideshow_deploy]

    22 Responses to Pelosi: Unemployment Benefits Biggest Stimulus for Economy

    1. Billie says:

      What is CRUEL NANCY PELOSI, IS YOU AND ALL OTHER government members destroying permanent jobs that provide for our families.

      MONEY may be a quick fix when you're democrat, keep feeding us what the country doesn't have and stealing our lives in the process. GET GOVERNMENT OUT!

      We can do it ourselves if FEDERAL GOVERNMENT wasn't making it impossible to CONDUCT BUSINESS IN AMERICA!

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    4. Brad, Chicago says:

      This is the most ridiculous statement from Pelosi, yet. Let's ask some people on unemployment how much they're spending. I bet they're spending less than they would if they had a job, since the unemployment payments are smaller than their former paychecks. Unemployment is not a stimulus; it's a stop gap to prevent demand from falling too abrubtly. If we are paying people enough in unemployment to allow them to pay for more than food and utilities, we're probably paying them too much. I have a friend who could take a part-time job, but won't, because it won't pay more than his current unemployment benefit and would only decrease his UI checks.

    5. Donna Heldermon says:

      If UI is such a 'stimulus' to the economy, then we should encourage all persons to be and remain unemployed for an extended amount of time as the more people on UI, the more job creation and stimulus will be created.

      I really cannot comprehend this nonsensical thought process. How about a reverse plan – reduce taxes on employees/employers equivalent in $ value to the current amount of UI being distributed and run a comparison on job creation & economic stimulation.

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    7. Katherine Hermance, says:

      Very interesting. Food for thought. Thank you for this post.

    8. Denise, San Diego CA says:

      Are you kidding me? I borrowed and pleaded just to live and support my kids when unemployment at first denied me. I fought it, and after months of waiting, I got it. I paid off everyone I had to borrow from, and got my bills all caught up. I look for a job EVERYDAY, which should be required to get benefits. I have not been successful yet, but just learned that suddenly my benefits have stopped. You think I am going to spend anything? This just puts me back again. How do I afford the gas to get to interviews? How do I pay for internet service to continue sending resumes? Stimulates the economy? More like helps us live. My unemployment barely pays mine and my kids living expenses. I sure the heck won't be stimulating the economy with that amount of money.

    9. Gerry, Maryland says:

      I am not lazy. I do not do drugs. I have paid my taxes for over 30 years. I pray & I vote.

      I lost my job last fall and have been looking desperately for a job. It is NOT that I am not looking & I did not lose my job due to wrongdoing-it was a cutback in my company.

      I am 50 years old and taking care of an ill parent who lives with me. I am out of options financially. My only income has been unemployment. I have used all credit & savings. I have an interview in 2 weeks and no money to get there. My rent is late now & utilities overdue.

      Without an unemployment extension I will lose my house, as my landlord needs the payment to pay the mortgage. The landlord will miss at least on month of rent if I have to move out because it takes time to find a new renter. My parent will have to go to a nursing home, which will cost the government (through the VA or Medicaid) much much more than the unemployment I was getting. I will be homeless as I have no other family.

      I also have medical issues that I have not had the money to address. Any care or food that I would get would have to be government or charity & those resources are extremely limited. With no home or car it becomes even more difficult to find a job. No address, no clean clothes no phone.

      I was earning over 70000 a year before this. I did not “blow” the money on luxuries. I was caring for two other ill relatives who have since passed away. It took all of my savings, but did keep them from being a “burden” on the government.

      I have been a responsible citizen and I do not want welfare. I don’t like being on unemployment but I did work for 30 years and paid into the “unemployment insurance” system and paid taxes.If you paid for medical insurance and your claim was denied in spite of desperate need you would be outraged-but that is what is happening to the million plus unemployed Americans.

      I did not vote to bail out banks, automakers, or to send so many jobs overseas. I did not vote to give oil & gas companies tax breaks and incentives.

      Now that I am the one who needs help our elected officials, esp. Republicans, are saying “NO”.

      A very sad day in America

    10. Billie says:

      Gerry, forgive me but, what if an extension were never purposed? What would you do then? This just happened to pop up as Nancy Pelosi and the democrats are fully aware of the destruction to the economy they continue to bring about. Obama, Pelosi, all the like minded are making it impossible to conduct business independently.

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    14. Jim Walsh says:

      This is a very sad story and I feel sorry for this person.

      But after working for 30 years there has to be some savings

      We all have relative who have had to be tken care of and have

      spent money to help them out. We all this said there is no excuse the collect for benefits for two years.

      And some one should explain to this indivual that the republicans

      did noot say no, but said yes if half of this money was paid

      for with the extra stinulous money that is sitting around.

      But of course Harry & Nancy said no to that idea.

      Not having any kind of job for two years is a terrinle waste of your time.

    15. Gerry, Maryland says:

      @ Billie & Jim Walsh

      If the extensions had not been proposed I would have been in the same situation I am in now. I have not received 99 weeks-I have received 26 weeks. I was just about to move to Tier 1 when the benefits were denied. I would have already been on Tier 1 if I had not done work (which I reported) since I lost my job. It was consulting but that was all that was available.

      So no, I have not been out of work for two years and I am not wasting my time sitting at home. I work at job hunting and caring for my mother during all waking hours. Please don't assume everybody who is asking for extensions has been unemployed for two years and has been financially irresponsible. And please remember that we paid taxes, medicare, social security AND unemployment insurance-in my case much more that I will ever take out. And yes, I did have savings that are now gone. I do not have family to fall back on. I am the one people have needed to lean on. I realize that everyone is not in the same situation that I am in but Many Are in equally perilous situations.

      It is a crisis in our country and will hurt everyone if it is not addressed. Homes will be lost, utilities unpaid, cars will be repossessed, food will not be bought, TAXES will NOT be paid (yes, unemployment is taxed) welfare and food stamps will be needed (which costs more to administer, but helps less-and taxpayers pay for it), etc etc etc. Further damaging our economy and making it even more difficult to get a job. And yes, people will die as a result-here in America. I am not trying to be melodramatic-it is a very harsh truth.

      Please keep in mind that the US has extended unemployment benefits in times of high unemployment since I was born 50 years ago-without ever asking for offsets to pay for it.

      I have never needed to ask for unemployment before, luckily. BUT, when some of the same Republicans who passed the extensions when Bush was President have now said "no" I find that to be hypocritical. Before you jump in and say the economy was better then-think about it. It was headed this way then. Instead of heeding the warning signs, they gave tax incentives to continue sending jobs overseas, gave tax breaks and incentives to banks, gas & oil companies, auto makers and funded some outrageous projects. They also voted to spend trillions on a war that many Americans are not supportive of.

      I am an independent, originally was a Republican for the record. I have not said that republicans are solely responsible for not passing the unemployment extension-but facts are facts. They voted "no". " Yes, if…" does not count. The democrats said "no" to the proposal that the republicans offered because of the tax loopholes that encourage businesses to ship jobs overseas. Democrats want to end the loopholes- republicans want to keep them. Closing those loopholes is critical to helping create jobs HERE. A bad political game that will backfire on them at election time.

      Neither party should put politics before the people they represent but they have- and some have acknowledged that it was political-McConnell being the most vocal of the lot. He is not even ashamed of it! He should be.

      For a Republican to vote "No" when Obama is in office and "yes" when Bush was in office tells you a lot about their character-or lack of it. The rules apply to Democrats, too if they do the same thing. Correct me if I am wrong, but Nelson is the only Democratic senator who voted "no" and he will probably not be re-elected.

      I believe there are a few Republican senators who would like to vote "yes" but are too afraid of the repercussions from their own party. Imagine the actual positive image they would create in the minds of most Americans by having the guts to vote "yes"-putting people before politics. If they truly believe saying "no" is right then I respect their right to their belief. But that is not what is happening in many cases.

      We only need one more person who will end up a hero in the minds of most. Maybe it will start a trend of actually representing the American people among politicians.

      That would be a refreshing change.

      We need politicians who show integrity. They will be re-elected.

    16. There is no more Hop says:

      This is awful ! I get all the extensions but don't qualify for FED ED because my base period I only worked 17 weeks instead of the required 20 BECAUSE I was laid off of that job after 17 weeks ! Prior to that job I had also been out of work due to this freaking reccession ! Prior to that and for years I always worked full time !

      Now Im going to lose everything because our ecomony is under water and we are called lazy ! Im 48 I dont even get replies to resumes ! WTF are we suppose to do ???

    17. Billie says:

      God Bless you, Gerry.

      The reason the republicans voted "no" is because obama and the like at all levels of government, are out of control. The benefits you and many others deserve that you've paid into have been grossly mishandled and inappropriately diverted over the years and obama's actions are making it worse. Businesses moving over seas has everything to do with unfair taxes, mandates and regulations. The government is doing nothing to promote businesses, everything to promote falsities and closings.

      I pray for the health of those you care for and your own. May God bestow wisdom during these times of man-made uncertainties.

    18. David, Visalia Calif says:

      In response to the comment that extending benefits " would clearly come with a major economic cost." I have to ask who is watching the store? The banks received 9.6 trillion US dollars for a bail out! Yet many many companies went out of business, including the company I worked for. I don't know about anyone else on UI benefits but every penny I receive goes back into the economy. If it didn't I would not eat!

    19. Roger Bankston Kentu says:

      How do you suppose we'll be eating or have a place to live with no Job or income. No worry to FAT CATS in DC because it doesn't affect their Paychecks. How are we going to bail out the Banks if we don't have Money to spend on Taxes? I thought we kicked out the ROYALS back in 1776.

    20. Mia says:

      Please, Lord, – Someone give me some assurance that this country WILL survive the current administration! You know, I have been researching this on the web for at least thirty or forty minutes. All I find are liberal sites with actual economists that say how giving MORE unemployment benefits and MORE food stamps stimulates the economy. SO, they upped unemployment benefits and food stamps last year. Recently, I heard theywere going to cut the Food Stamp program to bail out teachers, and the economy is still in the hole. Not one thing has been said about cutting spending…NOTHING! I am so angry! Even if we go to the polls in November and take back the House AND Senate, will anything change?

      Is there ANY politician that will talk to us like grownups and say how we need to cut the biggest entitlements – Social Security and Medicare/Medicaid, and just repeal Obamacare outright? (All that wasted time and money and energy on something we CANNOT afford!) Wouldn't privatizing Social Security help the economy, because people could invest the money the way they want? Wouldn't allowing the purchase of insurance across state lines make it more affordable? How about privatizing education and getting rid of the DOE?

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    22. joecarrsr says:

      This statement is in the same category as"Let us pass Obamacare and we can see what is in it. So foolish that is something not to speak about. Where does she get this political poetry from?:

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