"Mean-Spirited, Bad Economics"

Simon Johnson wonders why we are so stingy when people are having trouble through no fault of their own:

Mean-Spirited, Bad Economics, by Simon Johnson, The Baseline Scenario: The principle behind unemployment insurance is simple. Since the 1930s, employers ... have paid insurance premiums ... to the government. If people are laid off through no fault of their own, they can claim this insurance – just like you file a claim on your homeowner’s or renter’s policy if your home burns down.

Fire insurance is mostly sold by the private sector; unemployment insurance is “sold” by the government – because the private sector never performed this role adequately. The original legislative intent, reaffirmed over the years, is clear: Help people to help themselves in the face of shocks beyond their control.

But the severity and depth of our current recession raise an issue on a scale that we have literally not had to confront since the 1930s. What should we do when large numbers of people run out of standard unemployment benefits ... but still cannot find a job? At the moment, the federal government steps in to provide extended benefits.

In negotiations currently under way, House Republicans propose to cut back dramatically on these benefits, asserting that this will push people back to work and speed the recovery. Does this make sense, or is it bad economics, as well as being mean-spirited? ...

Why would anyone now seek to punish these people when they seek work but cannot get it? ... Extended unemployment benefit provides on average about $300 a week – ...only about 70 percent of the poverty level for a family of four. If you strip even this money from people who remain out of work through no fault of their own, you will push more individuals and families onto the streets and into shelters. The cost of providing those fall-back services is very high – and much higher than providing unemployment benefits.

How does it help any economic recovery when the people who lose jobs cannot even afford to buy basic goods and services – enough to keep their family afloat? ...

The recent attempt to portray the unemployed as lazy, TV watching, video game playing, frauds living off the benevolence of the government when they could be working is part of the effort of those who have managed to do well even though we've had a recession to avoid paying to help those who have been less fortunate. We will always be able to find people doing their best to take advantage of just about any program that helps people, but making a big deal out of those exceptions does not change the fact that the vast majority of the unemployed are just like the rest of us, just not quite as lucky. Whre's our compassion?