WaPo: What the debt ceiling deal means for the unemployed

[highplainsdem]

Found via a tweet from Ezra Klein -- this article from WaPo reporter Brad Plumer is on Ezra's blog:


http://www.washingtonpost.com/blogs/ezra-klein/post/what-the-debt-ceiling-deal-means-for-the-unemployed/2011/08/01/gIQAEDwmnI_blog.html

Posted at 02:22 PM ET, 08/01/2011
What the debt ceiling deal means for the unemployed
By Brad Plumer


The debt-ceiling deal, as we know, contains no stimulus. Nothing on jobs. No relief for the out-of-work. And that’s a real worry because, at the end of this year, existing emergency unemployment benefits — the ones that were extended as part of the 2010 tax-cut deal — are set to expire. Yet there are still millions of Americans who can’t find work. So what happens to the unemployed at that point?

-snip-

Add it all up, and letting unemployment benefits dwindle could provide a hit to the economy of about 0.5 percent of GDP. That’s a sizeable dent, especially when we’re barely seeing any economic growth as it is.

Meanwhile, the effects would ripple down to the state level. Conti notes that 33 states are already borrowing money from the federal government to pay their unemployment benefits. (In his January budget, President Obama proposed waiving state interest payments, but that idea went nowhere.) If Congress doesn’t extend aid, states probably will restrict eligibility and cut back existing benefits even further. Stone points out that a lot of states have automatic triggers that will automatically cut unemployment programs if federal money stops flowing.

Conservatives might be inclined to say, fine, that will force people to look for work. They might even cite Harvard economist Robert Barro’s suggestion in the Wall Street Journal that the jobless rate would be 3 percent lower if unemployment hadn’t been extended to 99 weeks. But there’s reason to think Barro’s wrong. Conti points out that there are now at least five unemployed people for every one job opening — the main roadblock here hardly seems to be lazy, unmotivated laid-off workers living high on fat UI benefits. Second, two recent studies by the San Francisco Fed and Goldman Sachs suggest that extended unemployment benefits contribute just 0.4 percent to the jobless rate. Cutting off aid would produce a small gain in exchange for a lot of extra hardship.

-snip-

Emphasis added.

[Dragonfli]

1. Basicaly, both parties and Obama personally have said to us unemployed, "go pound salt"

Edited to add:

It is already happening, the 83er's are the new 99'rs in New York state, my benefits are being cut by 7 weeks I was JUST informed, and I have nothing but empathy for the red states that I am willing to bet are being even more harsh. I am one month away from homelessness and am suffering a life threatening illness right now that I can not get the treatments for (only a 50% success rate, so maybe it wouldn't help anyway).

In two months I will be in agony in the streets and do not believe I will even get palliative care, my friends here already know this last part.

If it even matters, I paid FICA for thirty years and if I can even get dissability to help while I die it would take a couple years to go through and would therefore be moot.

Yippie we won something! and I get to lose even more!

[EFerrari]

2. Yep.

[WCGreen]

3. This is why the no increase in spending is bullshit...

Every dollar injected into the economy has at least a little multiplier effect which essentially means as that dollar winds through the economy, it creates economic activity. I get a dollar and buy something and that person buys something and on and on until the dollar has circulated through the system.

Some dollars go only once or twice, those spent on say imports, but some dollars go five six times through the economy.

If those dollars are removed from the process, as the GOP wants, that multiplier effect is not even started.

In fact, those dollars removed from the economy will have a devastating effect to this weak economy.