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Think Twice Before Extending Unemployment Insurance

Unemployed Man

During a recent weekly address, President Obama called for Congress to reinstate jobless benefits (affecting 1.3 million Americans) for three months. According to Obama, unemployment insurance is a “vital economic lifeline,” and without it, the economy will slow for all Americans.

Unemployment insurance was provided during the heat of the financial crisis in 2008, and understandably so, as the year’s total job losses reached 2.6 million—a record high since 1945. Although these benefits were intended as a temporary relief for 26 weeks to those impacted by the crisis, the payments became a source of regular income, as the insurance was extended 13 times over the past five years.

Now that the thirteenth extension has expired, Congress remains divided about whether to extend the benefits yet again. But the significance of the issue surpasses the extension’s cost of $6.5 billion, which is pocket change in comparison to our federal debt, worth $17 trillion.

Advocates for an extension are trying to put a Band-Aid on a wound that has needed stitches for the past five years. Tailoring the argument towards unemployment benefits is targeting a symptom, rather than treating the illness—the deeper issue of a tepid economic recovery. If unemployment insurance is as economically vital as Obama suggests, is he not conceding his own administration’s bleak progress when it comes to the economy? Throughout Obama’s campaign, he championed the supposed millions of jobs created under his administration. So, why do so many people still need insurance?

Further, if Obama’s recovery were so successful, why would the absence of such a small injection of federal spending into the pockets of 0.4 percent of the U.S. population have such an impact as to slow the economy for all Americans? Mostly because—for Obama, government is the wizard behind the curtain, the solution to our economic woes.

Unemployment benefits are not supposed to fuel the economy. They should exist to provide temporary relief for those who are unemployed and looking for a new job. The fact that Obama believes the economy will slow without unemployment benefits implies that our economy relies upon them, when in reality, the welfare handouts are recycled money, and do not create new wealth. While instating unemployment insurance during the financial crisis was well-intentioned and appropriate given the circumstances, it has become another vehicle for the Obama Administration to redistribute wealth.

In addition, economists have found that unemployment benefits, especially over an extended period, create dependency as it discourages individuals from looking for a new job. If one can continue receiving payments without working, why work? Although social welfare payments help individuals in the short-run, they are crippling to human flourishing in the long-run, as individuals are enabled in their dependency by government, rather than being encouraged to support themselves.

[pullquote]     Obama’s first priority should be creating an environment that is business-friendly and conducive to economic growth.[/pullquote]

Obama also noted that not extending unemployment insurance would be a drag on businesses, keeping them from hiring—we need to focus on “helping businesses create more of the good jobs that a growing middle class requires.” Yet, according to Pew Research Center, fewer Americans categorize themselves in the middle class than in 2008 when Obama took office. So, perhaps we should focus on the real drags on businesses, such as the staggering costs of Obamacare or the tedious regulations that act as barriers to business.

Americans have endured a particularly long and arduous recovery. As our country’s leader, Obama’s first priority should be creating an environment that is business-friendly and conducive to economic growth, in which individuals do not need government handouts, but can thrive on their own. Obama was absolutely right when he advocated for a year in which more Americans “earn their own piece of the American Dream,” and correct when saying we don’t abandon our fellow Americans when times get tough. But he was misguided when inferring, “we keep the faith with them until they start that new job.”

The American Dream does not start with a government handout, and we don’t keep the faith with an individual only when they are receiving those handouts. As Americans, our faith has always been rooted in those who pay their own ways, who pursue their utmost potentials by innovating and producing, and who pick up two and three extra jobs just to make ends meet in order to accomplish their American Dreams. This is what we should always strive for and what made Americans the most prosperous and often most successful in the world, even if it means a little tough love.