Here is something for economic illiterates to consider:
The Congressional Budget Office (CBO) reported last month that, while the emergency UI [unemployment insurance] program would cost $25.7 billion for another year, it would create 200,000 jobs and add 0.2 percent to gross domestic product.
Now, why would paying people (essentially) not to work wind up creating 200,000 jobs?
The reason is pretty simple. You would be creating $25.7 billion of increased demand in the economy. People who are receiving unemployment insurance are strapped, and they use the money to pay their rent or mortgage, to buy groceries, and to put clothes on the children’s backs. When they spend money, it creates sales and profits, which creates jobs. If they don’t spend that money, those jobs don’t get created and we wind up paying for their poverty in other ways, like depressed real estate prices, food stamps, welfare payments, unpaid bills, and higher health care costs.
So, yes, you can create 200,000 jobs this year simply by paying some people for not working. Or, you can not create 200,000 jobs this year by refusing to give them assistance, and the end result will be a reduction of 0.2 percent to gross domestic product.
Supposedly, John Boehner is willing to consider extending unemployment insurance, but only if it is paid for. But, remember, the whole reason it works is because it increases aggregate demand, which means that paying for it with budget cuts in other areas is completely self-defeating. The only way you can pay for the benefits without destroying your purpose is to spread out the payment over a number of years. So, for example, you could pay for the $25.7 billion cost over ten years and still get a good return on your investment. Paying for it in this year’s budget would largely eliminate the upside, leaving only the disincentive for some people to look as aggressively for work as they might otherwise.
But, look at me. I’m trying to talk reason to a dining room table.
Self defeating you say? Sweet mother of pearl, hearing Bernake complaining about how restricted his job has been with the R’s throwing up one blockade after another against our economy is galling. Had it not been for these dining room table minds this Country would have trounced this Recession and employers would be begging people to come to work by now.
It’s not self defeating if you take the money from someone who would otherwise stash it in a bank account.
So cut stuff that goes to 1%ers. You know the list: pentagon weapons contracts, ag subsidies, bankster bailouts, export assistance, oil and gas depletion allowances…
So I’m having an exchange today with a wingnut in the comments section to an online newspaper article about the ACA. There’s been a number of frustrating exchanges; here’s one. He claimed multiple times that Obama is breaking the law by his Administration’s decision to allow insurance companies to continue to offer insurance plans below ACA standards for one more year. (The ellipses are his; I’m not skipping any of his words.)
Me: “If the Adminstration’s actions here were breaking the law, then there would be a lawsuit successfully blocking these actions, right? The absence of such a lawsuit is problematic for your argument here.”
Him: “It’s Obama’s AG… He is not going go indict his own president. That is one of the stupidest things you have said…and it’s a long list.”
Me: “The plaintiff in a case against the Federal Administration would be a private individual, or someone representing private individuals. No idea what you’re nattering on about here.”
Him: “Right … Someone will bring charges against Obama. Just like they did against Bush. Clinton committed straight-up perjury and wasn’t charged. I don’t even want US presidents charged…even Obama and Clinton. But let’s not pretend. I know where you are coming from…no need to reply.”
Me: “Clinton was impeached in the House on a perjury charge, and a team of House prosecutors took their charge to the Senate, where it was defeated. I am unsurprised that history is slippery in your hands.”
Him: “That’s why it doesn’t work…cronies don’t convict cronies. You proved my point. Seriously…you are trying to split hairs. You know that your comment about if the administration was breaking the law there would be a lawsuit was a stupid comment. Own it and move on. Presidents break laws…they don’t get convicted…your statement was goofy. Again…I expect you are signed up for Obamacare. No? That’s what I thought.”
Me: “I am puzzled about why you are unclear on the concept here. The Supreme Court has been petitioned numerous times by private organizations and States’ Attorneys General with claims that various portions of the ACA and their implementations by the Obama Administration are unlawful. A half-dozen of these cases were heard together in 2012. Here, click this link:
http://www.supremecourt.gov/do...
In fact, Chief Justice Roberts’ majority opinion that summer did find the original ACA’s mandatory expansion of States’ Medicaid eligibility illegal, so that part of the law was tossed out. There have also been numerous Federal Circuit Courts which have held judgments on numerous portions of the Act. These have included disputes involving the Administration’s implementation of the law.
A judgment could come down from a court which would declare illegal the Administration’s decision to allow individuals to carry plans for another year which do not meet ACA standards. That judgment has not come down; in fact, as far as I know, no one has filed the claim in a court of law. This is why I am asking you to understand that your claims that the Obama Administration is breaking the law here are hollow and unsubstantial.
I hope this helps your understanding. If it doesn’t, you’re not engaging in discussion; you’re just trolling.”
Retrospectively, I should have found the last conclusion earlier.
Yes, I recognized your reference. http://www.youtube.com/watch?v=nYlZiWK2Iy8
“You would be creating $25.7 billion of increased demand in the economy.”
I’m not so sure the “economic illiterates” actually don’t get that part. It’s that the billions are going to “those” people, and not in their pockets.
Or you could take that $25.7 billion, fire up the Works Progress Administration and Civilian Conservation Corps (and keep them fired up by law until the U3 unemployment rate drops below 5.5%, with an automatic relaunch if U3 rises above 6%), hire 400,000 Americans at $50,000 per year (plus medical), and have them go fix America’s rotting infrastructure.
But that would (also) be far too sensible, wouldn’t it?
That might lead to Socialism, comrade.
We can’t have that here, because Freedom.
More money is locked up by the 1% and demand is stymied. It has created the biggest slowdown in the velocity of M2 money (short term money) since it was measured.
From the fed:
http://research.stlouisfed.org/fred2/series/M2V
So we need to take back all the money that they’ve stolen?
Sign me up.
No, dining room tables don’t do counterintuitive. How can giving money to unemployed people create jobs? How can global warming cause blizzards?
Of course, the discourse isn’t for the benefit of the dining room table, but of anyone within earshot who might be capable of listening and understanding. So I think it’s always worthwhile to try to come up with clear and cogent ways to explain that, for example, capitalist economies are driven by the flow of capital. There’s no shortage of capital, but it isn’t flowing, so our economy is stagnant. So one way or another, we need to increase the flow.
This is the same argument one would make about tax cuts. Why just last year this time, the payroll tax “holiday” expired and it took some $100+ billion out of the “economy”. So if we really think this $26 billion will create 200,000 jobs then let’s give everyone their payroll tax cut back and create a million jobs!
Of course that’s not how it would work and everyone knows it. The problem in our economy is that the link between economic growth and “job creation” is broken. If corporate profits had translated to job growth these last 5 years we wouldn’t have an unemployment problem.
As this meme has now fully penetrated the debate, there is little stopping it now, but it does not strike me as a compelling argument for anything except another massive payroll tax cut.