A rather heated debate seems to be ensuing it ensues about every 90 days, merely growing louder at each iteration about whether the Congress should again extend benefits for the unemployed.
The question that draws the most attention, understandably, is whether this is a good idea. As usual, though, Id like to focus instead on a supposedly minor, related concern.
For the record, I understand most of the unemployed are out of work through no fault of their own, and that finding a job during this government-exacerbated recession especially one paying an income near that to which the wage-earner had become accustomed is a nasty and difficult undertaking.
I also understand that unemployment insurance, as generally constructed, does a much better job of making whole the $15,000-a-year worker than the $75,000-a-year worker something that ought to be fixed.
I was on unemployment myself, several times, in my younger days. The rigmarole our government masters put us through in order to prove we were legitimately seeking work was as absurd as most government undertakings. Like magic, however, most of us tended to find a new job even if it wasnt our first choice job, at first choice pay on a date curiously close to the date when our unemployment insurance benefits were scheduled to expire.
Today, the taxes and regulatory burdens set by government on any private business attempting to create a new job are so onerous (What will my health insurance obligations be? What could the ADA cost me? I have to withhold and match payroll taxes, on penalty of imprisonment, how often?) that its a miracle anyone finds work other than under the table work, where there sure aint no benefits.
Nonetheless, the macroeconomic truth is that continuing to hand money to people as compensation for being unemployed while artificially propping up wages and prices at inflated levels merely prevents the needed economic correction. The best way for the nation to recover from the misallocation of resources caused by real estate and stock market bubbles would be to slash government taxes and regulations, allowing both existing businesses and new entrepreneurs to hire all kinds of people at much lower starting wages, without even bothering to tell the government what theyre up to.
None of which is my main point today.
My main point today is: Why do we let them get away with calling this an extension of unemployment benefits?
When you take a regular, above-ground, payroll withholding type job (of which on these shores there are going to be fewer and fewer, and eventually none other than for unionized bureaucrats, for which you can thank the statists with their endless taxes and add-on mandates), your employer pays unemployment insurance premiums on your behalf.
As with any insurance policy, the benefit, should it be triggered, is known in advance. The rates for that insurance policy are set by actuaries, who study and calculate the chances that X number of workers each year will find themselves unemployed for as many as 13 weeks, or 26 weeks, or whatever level of temporary income loss the insurer is agreeing to cover.
When Congress says, Hey, pay them for 39 weeks. No, we changed our minds, pay them for 52 weeks. No, no, for 78 weeks, do they send the actuaries scrambling back to increase the premiums now being charged employers of existing workers, so that the income drawn from those premiums will now cover 78 weeks of unemployment benefits?
I dont think so. I dont think theyre extending unemployment benefits, at all. I think these are just cash handouts income transfers from the taxes of those still working, without regard to the premiums collected in the past.
Imagine I total my car. My insurance company tells me it was worth $5,000 (thats high you havent seen what I drive), and that a $5,000 payment is thus all theyve contracted to pay me in exchange for those premiums Ive been sending in all these years. I accept their $5,000 check. Then, the next month, I call my congresscritter and say, Times are tough. Id like to have my auto collision insurance extended. Please send me another $5,000.
Assuming my congresscritter is an economic idiot (is that a stretch?), he or she says, What a great idea. People are suffering. People who vote. I can make myself popular. Lets dig into current tax receipts and mail everyone whose car was wrecked last month an extra $5,000. Pretty soon Im calling my congresscritter every month, and getting another $5,000 from the government every month.
It sure helps. Theyve bought my vote and my silence. You think Im going to squawk and risk ruining this deal? But is this really an auto collision insurance extension? My insurance company got done paying me what it had contracted to pay me, long ago. If the government were really forcing GEICO, or Travelers, or State Farm to send all their recent past claimants an extra total value check every month, those firms would soon be bankrupt. Why arent the folks who administer the unemployment insurance policies bankrupt?
Because I dont think thats whats happening. I think the government is just printing money as fast as it can, and sending it anywhere it can think of, to keep everybody off their backs while they try to figure out which wacky new bailout or slush fund to try next.
Problem is, thats not speeding up the needed economic correction. Its pushing it off indefinitely, while inflating the currency into something more closely resembling Monopoly money. Lets just call things what they really are thats all Im asking here. Once youve been paid the maximum benefit calculated when the actuaries set the premium rate for your unemployment insurance, theres no way to extend those benefits, no matter how nice that makes things sound.
This hush money is coming from somewhere else.
Vin Suprynowicz is assistant editorial page editor of the daily Las Vegas Review-Journal, and author of Send in the Waco Killers and the novel The Black Arrow. See www.vinsuprynowicz.com/.