Quick Hit Josh Kalven Tuesday July 6th, 2010, 8:39am

Combating Unemployment Benefit "Cluelessness"

In case you missed it yesterday, New York Times columnist Paul Krugman wrote that opponents of extended unemployment aid represent a "coalition of the heartless, the clueless and the confused."  In the piece, Krugman conceded that those receiving unemployment benefits "are likely to be slightly more choosy about accepting new jobs," but then went on to make this crucial point:

One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That’s why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly — while allowing that aid to lapse, which is what is happening right now, is a recipe for even weaker job growth, not in the distant future but over the next few months.

That's exactly right.  As numerous economists noted during the debate last year over the Recovery Act, safety net spending -- such as unemployment aid and food stamps -- is the most effective form of stimulus because the money reenters the economy immediately.

Oh, and by the way, 82,000 Illinoisans have lost their benefits since the filing deadline expired at the end of May.

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