According to the Bureau of Labor Statistics there are 11.6 million unemployed persons in the United States today. Meanwhile, the current estimate of the total cost of the spending package passed to alleviate this distress is $827 billion. President Obama has framed his defense of this expenditure largely on job loss grounds. Lately he has gone so far as to warn that without passage of the package in full, the unemployment rate (currently at 7.6%) could hit double digits.
Let’s assume he’s right. Let’s even assume the total unemployment figure doubles to 23.2 million persons — a number which would likely require massive business failure and the collapse of entire industries to achieve. But for the price of the recovery package to head this off, we could afford to pay each of these 23.2 million future unemployed persons over $35,000 a year…which is almost exactly what the average individual income in the United States was in 2008. But here’s the thing, we wouldn’t have to pay them that, because there aren’t 23.2 million persons unemployed yet. Maybe there will be at some point in the future, but then again maybe there won’t.
The staggering expansion of government spending we are witnessing from those who used to restrict their advocacy to social safety nets for if someone happened to fall, is enough to make you nostalgic. Nostalgic for the days of profligate and wasteful welfare benefits, which seem positively frugal compared to this new invoice. Bring back the caricature welfare queen says me, with her Cadillac in a public housing garage. Incidentally, the base price for a Cadillac CTS is about $35,000 too. We could buy every currently unemployed person two of them with that recovery bill’s price tag.
Looking backward, the great value of the welfare system is that it is reactive, individual and conditional. That is to say, you have to personally lose your job in order to receive federal benefits. Now we’re apparently shifting to a model where massive indirect economic assistance is rendered for people who are currently still employed, because they might become unemployed at some point in the future. I prefer the old model in retrospect.
An interesting argument – though I do have to say you might think welfare spending is not wasteful or profligate if you ever found yourself having to depend on them.
True enough, but the wastefulness I was talking about wasn’t the principle of an unemployment insurance policy, but the pre-reform system prior to the 1990s. A period when people such Barack Obama publicly opposed work requirements, sunset provisions and so forth.
Obama of course has since recanted on his opposition to those reforms, labeling his earlier attitude one of his worst political mistakes. But if this stimulus policy is what we get in its place, I’d prefer him to go back to his older view of the necessity of a less restrictive social safety net. Indeed, this is more like kidnapping and forcefeeeding someone than catching them from falling into starvation.