President Obama: Paying People To Be Unemployed "Actually Creates Jobs"


Up is down. Right is left. White is black. Hot is cold.

Keep in mind that Democrats also claimed Obamacare would create “millions of jobs,” which I think we can all see now is untrue.

But here’s the problem with the President’s premise: Unemployment benefits are a transfer of wealth. They go from the people who pay the unemployment tax, employers, to people who collect the unemployment benefits. The federal government picks up the tab for administrative costs and, since the 2009 “stimulus” legislation, the months of extended benefits.

The argument for the idea that unemployment benefits create jobs is based on the notion that people use the money they get from the benefit to engage in commerce. They eat, pay bills and shop. But those sorts of commerce are relatively inflexible. Job or not, everybody has to eat.

Whatever commerce the unemployed may engage in, the economic impact is offset by the cost of funding their benefits. You cannot talk about one side of the equation without talking about the other.

If putting people on the government dole stimulates the economy, then why not put everyone on the government dole? Here’s a hint: Because at some point, somebody has to pay for it all.

Democrats have done a very good job in the Obama era of painting government spending as an economic stimulus, not a cost. They argue against cuts to food stamps, unemployment benefits, Obamacare, etc., etc. as having an economic impact. If the government spends less, the economy will perform less.

But those talking points only work if we ignore where the government gets the money it spends in the first place.