The project of extension the unemployment insurance benefits was approved in July, 2010. This six-month extension program was signed by US President Barack Obama. This act returned financial aid to about 3 million people, whose checks were cut back due to the end of the program in June. This measure cost $34 billion to the US Congress. The American President confirmed that "Americans who are fighting to find a good job and support their families will finally get the support they need to get back on their feet during these tough economic times," (Montgomery, 2010). This program envisages up to 99 weeks of the financial support by the federal government. In comparison, the previous program included only 26 weeks of the financial aid. The unemployment rate in the United States is about 9.5 percent. Obviously, the workers, who lost their jobs during the recession, are in need of the aid.
On the other hand, the Republicans tried to oppose the approval of the unemployment benefits. There were two main reasons for the party not to support the act. First of all, the United States have an incredible external debt and the country simply cannot afford to provide citizens with another insurance benefits, especially taking into the account the fact that the new benefit program envisages a prolongation in time during which the financial aid would be provided. Secondly, the Republican party claims that extension of the unemployment benefits would prevent jobless workers from finding work places as they would not be interested in obtaining jobs.
Frankly speaking, their reasons are not supported by solid facts. On the contrary, the amount of money needed for the implementation of the program ($34 billion) is comparatively small and is equal to 2.5% of 2010’s deficit forecast. As the American economy is still unstable, weak demand could be a bigger threat to recovery from the recession than indebtedness (The Economist, 2010). This means that the fears of the Party regarding the financial burdens are groundless. Furthermore, the extension of the unemployment benefits is an additional guarantee for the government that the jobless population would not apply for the Social Security Disability Insurance (SSDI). There is only a little chance that after this program workers would return to representatives of the labor force. The recent estimates proved that in case only 200,000 unemployed workers would change their minds to the SSDI this could enlarge the government lifetime costs up to $24 billion a year. Whenever unemployment benefits keep the workers as a labor force the savings could be significant.
Besides, the statement of the Republicans that the long-term unemployment benefits would keep the unemployment rate high does not have any proof. The recent study made by the economists of the San Francisco Federal Reserve Bank shows that the contribution of the benefits is at only 0.4 percentage points of the close-to-10% jobless rate (The Economist, 2010).
Finally, the vast majority of America nation supports the extension of the unemployment benefits. Seventy three percent believe that it is early to cut back benefits for people who still struggle to get a job. Only 24 percent of the nation supports the statement that over $1 trillion of deficit is enough to cut back the benefit (Needham, 2010). This means that the nation fully understands the problem and supports President’s decision.
The extension of the unemployment benefits causes lots of troubles for the American economy. It increases the external debt and deficit. Besides, it could be a threat to the government – labor force can be uninterested in taking jobs. But this step is inevitable. And it appears to be more profitable than the program that does not envisage an increase in unemployment insurance benefits. The extension is an efficient tool that helps to save money in the future by keeping people from applying to the SSDI. So, definitely, the implementation of the extension program is the step that should be taken by the US President as it allows reducing tension in the future and lessening the financial burdens for the budget.
Montgomery, L. “President Obama signs six-month extension of emergency unemployment benefits”. The Washington Post 23 July 2010. Web. 19 November 2011.
Needham, V. “Poll: Majority of voters support another extension of unemployment benefits”. The Hill 15 November 2010. Web. 19 November 2011.
“Read this shirt. A titanic struggle to decide whether the jobless should get money for longer.” The Economist 22 July 2010. Web. 19 November 2011.
“State Unemployment Insurance Benefits”. United States Department of Labor. 13 Jan, 2010. Web. 19 November 2011.