Nicole Neily

Keynesian economists insist that the unemployed need this money because they quickly spend it.... and that stimulates the economy.  This theory overlooks one small problem:

The money has to come from somewhere.

As the Cato Institute’s Alan Reynolds notes:

"Whether the government pays people to work or to stay on the dole, it has to get the money by taxing, borrowing or printing money — all of which reduce real income and employment opportunities in the private sector.  To imagine that borrowing from Peter to pay Paul is a way to create or save Paul’s job is to forget that Peter expects his money back with interest."

Aside from the “how do we pay for it” dilemma, the unseen consequences of paying people to not work are numerous – including the loss of marketable skills, damage to long-term job prospects (quite honestly, it looks really bad to be out of work for two years), and diminished self-esteem. And dependency begets further dependency, as individuals often end up on other government assistance programs like food stamps and Medicaid, while collecting unemployment benefits. With that much cash coming in from the government, suddenly an entry-level job where you have to pay for those things out of your paycheck starts to look a lot less palatable.

Although it seems like a “kind” thing to do, extending unemployment benefits will lead to a host of new problems that our country can’t handle right now.

The best way to help the unemployed is through creating jobs for them – real, sustainable jobs, not temporary seasonal hiring. With businesses paralyzed by fear over what new regulations will be placed on them, and what the tax code will look like (after all, someone’s going to have to pay the bill for all this government spending!), it’s no wonder that American companies aren’t hiring. Let’s provide some economic certainty – not feel-good gimmickry.

Nicole Neily

Nicole Neily is a Senior Fellow at the Independent Women’s Forum.