Concerns mount about extended unemployment benefits 

When Congress returns next week, Democratic leaders will take up legislation to extend unemployment benefits for the eighth time since 2008.

Much of the fight to pass the bill will revolve around whether to pay for the cost of extending these benefits or simply add them to the $1.3 trillion deficit.

But another argument has crept into the debate. It centers on whether the benefits should be extended at all beyond the standard 26 weeks offered by states.

"There is an economic argument that the longer you extend unemployment benefits, the longer people are unemployed. And after a while it adds to the problem rather than solves the problem," said Rep. Jack Kingston, R-Ga., who is a member of the House Appropriations Committee.

Kingston said that theory will not necessarily stop him from voting for a bill to extend benefits if they are paid for with cuts elsewhere in the federal budget or with money diverted from other programs such as the $800 billion economic stimulus.

The Peach State, after all, suffers from a 9.8 percent unemployment rate.

But some Republicans are beginning to make the case that, aside from the cost, Congress should simply stop extending unemployment benefits because without them, people would get back to work faster.

Under the program that expired in June, a combination of state and federal money extended jobless benefits for 99 weeks. Some economists argue that the federal payout dulls the desire to find employment.

Congressional Democrats have tried several times to fund the extension until the end of November but have come up short on votes.

Sen. Jon Kyl, R-Ariz., ignited a political firestorm last week when he said during a Senate floor speech that extending unemployment benefits "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

Kyl's statement was widely criticized by Democrats, who argued that with typical payments of $300 per week, few would avoid looking for work.

"To those who say that we shouldn't extend unemployment benefits because it is a disincentive to work, I say that is an insult to the working people of our country," said House Speaker Nancy Pelosi, D-Calif.

Kyl's argument is based on several economic studies, including one conducted in 2003 by economists Stepan Jurajda and Frederick Tannery that found longer-term unemployment entitlements lead to longer-term unemployment duration. Once benefits end, the study found, about a third of the unemployed quickly found work.

Democrats in Congress are not buying that theory, however, and point out there are too many job seekers and too few openings for people to find work quickly.

"That is both mean and stupid," said House Financial Services Committee Chairman Barney Frank, D-Mass. "The notion that there are a significant number of people who will take significantly less money is just crazy."

Labor Department statistics show there is one job for every five people seeking employment.

Heather Boushey. senior economist for the Center for American Progress, a liberal think tank, said other economic evidence shows extended benefits are not increasing the duration of unemployment.

"In normal economic times, when unemployment is 5 or 6 percent, giving people benefits for 26 weeks makes sense," Boushey said. "But right now, there simply are not enough jobs for all of the unemployed to get."

sferrechio@washingtonexaminer.com

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Susan Ferrechio

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