An Alternative to Unemployment

[Geee]

American Spectator:

If there's any question that the Obama Administration is coming up dry with new ideas for job creation, Agriculture Secretary Tom Vilsack all but confirmed it last week. In an interview, Vilsack bragged that one in seven Americans are now on food stamps. Why brag about such a thing? Because, said Vilsack, every dollar from the food stamps program "generates $1.84 in the economy in terms of economic activity.… It's the most direct stimulus you can get in the economy during these tough times."

Seriously, this is what passes for economic thinking in the Obama Administration right now. By Vilsack's logic, if food stamps are such a boon to the economy, then why not put all Americans on food stamps? But it's this same faulty logic which seems to be governing the White House's plans for job creation. Even after extending unemployment insurance to an unprecedented 99 weeks two years ago, the White House seems prepared to fight any effort to eliminate the extension.

Consider the explanation from White House Press Secretary Jay Carney on the economic "stimulus" of extending unemployment insurance: "It is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get. They're not going to save it; they're going to spend it."

The White House should know better, especially given what we already know about extending unemployment benefits. According to an analysis by the Federal Reserve Bank of San Francisco, extending unemployment benefits to 99 weeks increased the U.S. jobless rate as much as 0.8 percentage points. In fact, note the Fed economists, the long-term unemployed now account for nearly half of all people out of work.

This shouldn't come as any surprise. I saw this firsthand when trying to hire a nanny in the Detroit area. One otherwise-qualified nanny said she didn't want to start until her unemployment benefits ran out. In the context of some 13.9 million out-of-work Americans collecting up to two years of unemployment, we must wonder if our well-intentioned social programs are backfiring.