As the long-term unemployed population in America continues to swell, with an estimated 4 million or more people now out of work, Congress is faced with a dilemma: how to extend unemployment benefits for those affected without blowing a hole in the budget deficit. The issue has become particularly pressing as the current Congress is set to expire, leaving the fate of the long-term unemployed in the hands of the next Congress.
The long-term unemployed are at a distinct disadvantage in the job market, with five people vying for every job opening, and often lacking the necessary skills or education to compete with other candidates. This has had a significant impact on the economy, with the long-term unemployed unable to pay their mortgages or replace worn-out cars and clothing, leading to a drag on the economy.
In the face of this, some have argued that the Bush tax cuts for the top 1 percent should be extended for two more years, at a cost of $120 billion. However, this money would not be spent in the economy, as the rich already have most of what they want. In contrast, the unemployed would be likely to spend every penny of their unemployment benefits, stimulating the economy and creating or saving jobs. This is supported by a Labor Department report which shows that for every $1 spent on unemployment insurance, $2 are spent in the economy, and by Goldman Sachs analyst Alec Phillips, who estimates that if unemployment benefits are allowed to expire, the American economy would slow by a half a percent.
The long-term unemployed are not to blame for the economic downturn, with responsibility lying instead with those on Wall Street who gambled away other people’s money and corporate executives who cut payrolls to boost their own stock options. It is therefore illogical to reward the wealthy with an extension of the Bush tax cuts while failing to extend jobless benefits to hardworking Americans who have lost their jobs.
Congress must act quickly, as jobless benefits are set to lapse in just two weeks, affecting two million unemployed workers. If Congress fails to act, another 1.2 million will stop receiving benefits by the end of December, and the rest of those who now receive federal emergency extended benefits will gradually lose them. The solution is clear: extend unemployment benefits to those who need them, rather than extending the Bush tax cuts for the wealthy.
