Common Sense

December 15, 2010

By Louis Avallone

THEY JUST DON’T GET IT

For the love of God, and all that is good and great in this wondrous world, can we just talk a little common sense here, please? First, despite an $820 billion government “stimulus” bill last year, the economy has still shed more than two million jobs. And those proverbial, shovel-ready, construction jobs? Those have fallen by 450,000 since the stimulus bill passed, and unemployment has risen to 9.8%, not including those discouraged workers who have given up looking entirely.

Now comes a deal brokered by the White House and Congress that extends unemployment benefits for 13 months and Bush-era tax cuts for 24 months. While the White House advertises that seven million, unemployed Americans will be affected if unemployment benefits are not extended, it makes no provision for those unemployed Americans who have already claimed the maximum of 26 weeks of unemployment benefits from their respective states, as well as those that have claimed up to four “tiers” of additional federally funded benefits, totaling 73 weeks.

There are estimated to be five million of these Americans who are often coined as “99ers” (because they have collected unemployment benefits for the maximum number of weeks allowed). The White House deal makes no allowance for these folks. And the statistics grow more sobering. Nearly one third of Americans have been unemployed for 52 weeks or more. And 47% of Americans have been unemployed for at least 27 weeks, which is the highest since the government began keeping records in the 1940s.

So while extending unemployment benefits for 13 months provides needed cash to millions of Americans who have been sideswiped and stranded by this administration, continued extensions of unemployment benefits do not address the flawed reasoning of this administration’s chronic, and terminal, spending and taxing addictions. It does nothing to reform our federal government, strengthen the dollar, or encourage small businesses to grow and prosper.

This is why it frustrates so many Americans that Democrats continue to peddle policies that clearly have had no historically, measurable, or otherwise significant benefit to the economy.

The Democrats in Washington continue to hustle their flawed reasoning that any spending will boost the economy. But we’ve spent nearly $1 trillion now and the unemployment rate continues to rise.

Remember when Nancy Pelosi explained that extending jobless benefits “creates jobs faster than almost any other initiative you can name”? Or when Senator Brown (D-OH) recently said, “It’s extending unemployment benefits that creates economic activity that creates jobs, not giving a millionaire an extra ten or twenty or $30,000 in tax cuts that they likely won’t spend”?

Or when Vice-President Biden explained that unemployment benefits is a “powerful driver of economic growth” because the jobless tend to pump the money back into the economy quickly?

Well, they are, in fact, all correct. The non-partisan Congressional Budget Office concluded the same in a September 28 report, earlier this year.

But while it’s a short-term band-aid to extend unemployment benefits, common sense tells you that this is a long-term fallacy. If extending unemployment benefits creates jobs faster than any other initiative, why not increase the number of unemployed also, so that more unemployed benefits could be distributed to more and more folks, and therefore more jobs would be created?

Or how about reducing the poverty threshold so that more folks can qualify for food stamps, and thereby increasing consumer spending for groceries and other necessities. Any of this Democrat reasoning making sense yet?

Extending jobless benefits does support local economies because folks have more money to spend. But this is like giving $5 to your wife or husband. Yes, they have $5 to spend now, but you didn’t boost your household income by $5, you merely redistributed the $5, from your hand to theirs, and you have $5 less to spend now, but they have $5 more.
Government spending works the same way. It doesn’t boost national income or our standard of living. It merely redistributes income, less the cost of the bureaucracy to manage it all. And all forms of spending does not stimulate the economy, most particularly that which is wasteful.

Yes, the extension of unemployment benefits is necessary, but largely because of this administration’s continued mutilation of our free market economy. Still, Obama offers no fundamental redirection of his policies that have resulted in an incomprehensible 9.8% unemployment rate, with even his own economists predicting a reduction to only 8.2% unemployment by 2012. And all this, in the meantime, without any assistance to the increasing number of Americans who will soon have exhausted all available unemployment benefits (five million Americans and counting).

So, while the extension of unemployment benefits will add another $34 billion to this year’s unconscionable $1.4 trillion budget deficit, continued government spending has, and will, prolong the pain, while amazingly the rhetoric, and policy initiatives of this administration remain unchanged. They just don’t get it. In the words of Ronald Reagan, “Government does not solve problems. It subsidizes them.” And when you subsidize them, wouldn’t you just expect more of them?

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