CEI Will Score Senate Labor Vote Today

CEI Will Score Senate Labor Vote Today

Extending Benefits Would Do More Harm
January 06, 2014

Washington, DC, Jan. 6, 2014 - The Competitive Enterprise Institute (CEI) will score today’s vote in the U.S. Senate on the motion to proceed to S. 1845, a bill to provide for the extension of unemployment insurance benefits.

The score will be incorporated into CEI’s Congressional Labor Scorecard, presented in full on CEI’s labor policy website, WorkplaceChoice.org.

Opposition to the vote is premised upon the following principles:

1.      As written, S. 1845 would increase the federal debt by approximately $6.5 billion dollars over the course of just 3 months.

2.      Unemployment insurance extensions over the past 5 years have kept a good 600,000 people out of the labor force, show studies from the Federal Reserve Bank of San Francisco, the National Bureau of Economic Research, and even 2 studies from the current Chair of the White House Council of Economic Advisers Alan Krueger in 2002 and 2008 (before he flip-flopped).

3.      Extended unemployment benefits are disproportionately transferred to high-unionization, high-unemployment states, thereby rewarding poor performance.

4.      Frederic Bastiat’s Broken Windows Fallacy debunks the leading argument for spending this money.  Proponents claim that $1.00 paid in unemployment insurance benefits produces $1.60 in economic activity (according to the Department of Labor) or $1.10 in economic activity (according to the Congressional Budget Office).  Observers might easily conclude that  putting all Americans on the government dole would multiply economic activity.  Were this claim as simple as it would appear, we would have the economic equivalent of cold fusion, the financial parallel of perpetual motion.  In the same vein, Bastiat explained that breaking a window does not actually provide a net economic benefit by providing the glazier with window replacement work.

“What can we do that will actually generate economic growth and get people back to work? We should cut governmental red tape, such as clearing the way to build the shovel-ready Keystone XL pipeline, repealing the ill-conceived and age-old Davis-Bacon wage rates, and revoking the Volcker Rule that hamstrings our financial institutions.  The American people deserve more than a handout from lawmakers and taxpayers,” CEI Senior Fellow Aloysius Hogan explained in a January 5 USA Today commentary.