12 Jul 2010
With the U.S. unemployment rate currently hovering around 9.5%, there is still debate on whether to extend unemployment benefits once again. Under normal conditions, states would provide up to 26 weeks of unemployment insurance coverage for workers. Due to the recession, federal law had allowed an extension up to 99 weeks, depending on the rate in individual states. The extension expired in June, and Congress has failed to pass an additional extension. This means that those who exhaust the regular state benefits after June will not have the extension. There is controversy over how to fund the extension, and whether or not it is effective in aiding the economic recovery.
The majority of Congress was in favor of the recent bill extending unemployment benefits through November. However, there is a big divide, mostly along party lines, about where the money for the extension would come from. The Democrat created bill would have added the cost to the deficit, increasing government spending. Republicans blocked the passage of the extension, arguing that the money should be taken from the stimulus package already passed for economic recovery. The Republican argument is that increasing the deficit would only hurt the economy more in the long run.
Another issue at hand is whether the extended benefits actually help the economy to recover. Some have argued that extended benefits cause some unemployed to refuse work that does not pay much more than the weekly benefit. There are a few individual examples that support this, but the consensus is that most people will take any job they can get in these difficult times. Recent studies have shown that the extension has minimal impact on the average duration of collecting unemployment benefits – no more than a few weeks.
There is also some debate over whether there is a better way to spend money to stimulate the economy. Some economists have theorized that the government should invest in such things as building/repairing the country’s infrastructure, which would both add money to the economy as well as create new jobs.
Although there has been some positive economic news recently, the unemployment rate is still high and shows no sign of coming down. There is some worry about passing yet another bill in an attempt to stimulate the economy, but most would agree that some measure is necessary to prevent the country from slipping into a double-dip recession. This would mean that though the economy may grow for a quarter or two, it falls back into a recession. If this happens, it is believed to cause an even longer and more difficult road to recovery.