November 29, 2012

CBO: Extending Unemployment Benefits Would Cost $100K Per Job Created

Today, the Congressional Budget Office released a report informing readers that extending unemployment benefits for a year, an outlay which would cost the federal government $30 billion, would, because of its allegedly stimulative impact, generate 300,000 jobs.

Even if true, neither the CBO, nor the Associated Press in covering the report, noted that this result works out to a cost $100,000 per job. Bravely assuming that each new job created pays $40,000 per year, that’s a $60,000 loss in value received compared to money spent. The government’s tax take at all levels on that amount of earnings is likely about $10,000 or so. All of this is apparently considered pretty smart by the AP’s Sam Hananel and a quoted leading Democrat:

REPORT: EXTENDING JOBLESS BENEFITS CREATES JOBS

Extending the current level of long-term unemployment benefits for another year would add 300,000 jobs to the economy, according to a report from the Congressional Budget Office.

The analysis released Wednesday from the nonpartisan office estimates that keeping jobless benefits would cost the government $30 billion. But it would also lead to more spending by the unemployed, boosting demand for goods and services and creating new jobs.

Federal long-term unemployment benefits are set to expire on Dec. 29 for more than 2 million workers unless Congress approves an extension. Democrats have called for reauthorization of extended benefits, but Republicans generally oppose more jobless aid without additional spending cuts to offset the cost.

“This report is more evidence that extending help to those who are seeking work is a better investment for our economy than extending tax breaks for those resting comfortably atop the economic ladder,” said Rep. Lloyd Doggett, D-Texas, a member of the House Ways and Means Committee.

Since the government has been “stimulating” the economy to the tune of about $5 trillion in deficits during the past four years, Doggett’s and the CBO’s twisted “logic” would predict that the economy should have created 50 million jobs by now. Note that this hasn’t happened.

Nevertheless, big government fans continue to trot out this dreck, and its press lapdogs relay it unskeptically. What a sick colossal joke.

Cross-posted at NewsBusters.org.

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5 Comments

  1. That quote by Doggett is particularly rage inducing. For starters, nobody is “resting comfortably” atop the ladder because a) of how crappy our economy is and b) it takes years of work to both attain and/or maintain wealth. Second, extending UBs hurt those seeking work because it encourages dependency by encouraging sitting on the benefits and not moving on and of course plunges us more into debt which hurts everyone. Third, an extension of the current tax code that we’ve had for over a decade now is not a “tax break” which means something totally different (this clown can’t even get basic economic terms right). Lastly, consumption does not drive a successful economy, production does. That should be common sense. Saying otherwise is like saying you can put the cart before the horse. What a maroon. If he had been in the room when he said that, I’d have to fight back the urge to punch him.

    Also, CBO studies like this are worthless because they are extremely static and work on the assumptions built into them rather than actual reality.

    Comment by zf — November 30, 2012 @ 12:27 am

  2. However, the CBO report does makes sense IF you intend to fund the government’s operations via money printing (or rather wiring ones and zeros to the Treasury). The joys of Obamanomics, embrace the gift! Remember, Nancy Pelosi said unemployment benefits is economic stimulus…
    /snark/

    Comment by dscott — November 30, 2012 @ 8:43 am

  3. #1, of course plunges us more into debt which hurts everyone.

    This is a Zen question:

    If the money which the Treasury borrowed from the Fed to pay the unemployed never existed in the first place, then how can we be more in debt?

    If we borrowed zero, then how can we owe more than zero?

    Comment by dscott — November 30, 2012 @ 8:46 am

  4. Typical endless argument. Why not extend forever so we have massive economic growth?
    CBO does not adequately calculate the negative future impact.

    Comment by Jim — November 30, 2012 @ 4:18 pm

  5. #3, The money may not exist per se, but unfortunately the unfunded liability figure represented by the negative money transfer does, in the form of even larger (and ever increasing) numbers in front of a big minus sign.

    Comment by zf — November 30, 2012 @ 6:02 pm

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