Unemployment Benefits Discourage Work and Shrink the Economy

Wintery Knight has an interesting discussion of how unemployment benefits keep people from working, drawing on coverage from the New York Times and academic studies. As he notes, this undermines the methodology used by the Congressional Budget Office (CBO) in concluding that the stimulus package would increase the size of the economy in the short run. (Even the CBO admitted that the stimulus package would shrink the economy in the long run).

We recently discussed other ways that the stimulus package discourages work and cuts the size of the economy. The recent deal between Obama and Congressional leaders will extend these harmful provisions, as well as the unemployment benefits that discourage work. (That job-destroying $800 billion stimulus package also gutted welfare reform).

Earlier, we discussed how the stimulus wiped out American jobs, and Harvard economist Jeffrey Miron’s conclusion that the stimulus was not only a failure at creating jobs, but also was intended to push left-wing ideological goals, rather than to revive the economy.