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America has spent nearly half a trillion to keep the country’s unemployed afloat during this turbulent economic time.
The Congressional Budget Office recently announced that American’s out of work have filed claims and received unemployment benefits to the tune of $520 billion. The use of the funds has been necessary, as the length of time that people being out of work continues to increase and the unemployment rate hovers stubbornly around 7.9 percent.
It’s a hot button issue because it one of the details lawmakers are working out in a plan to keep the country from falling over the fiscal cliff. One of the proposals in the suite of cuts and deductions is to deny Americans extensions of the unemployment benefits. Currently only New York is eligible for unemployment benefit extensions.
The way unemployment benefits work is that for the first 26 weeks State government foots the bill and once those funds run out the federal government steps in for the next 47 weeks in a tiered system. If the claimant still finds him or herself without work, he or she can apply for extended benefits, which last for 20 weeks.
If the government decides to extend the unemployment benefits for Americans it could cost the country $30 billion. There are other options on the table though. The government could decide to extend the benefits for 14 additional weeks, which would cost the government $14 billion; allow recipients to ride the year out in their current tier which could cost $4 billion more; or lengthen the current extended benefits for year with a $3 billion price tag.
The CBO isn’t blind to the fact that extending the benefit program for the recipients has positive effects. Not only will people have a continued safety net, but they will have money to spend. However, the CBO worries that extending the benefits will create a sense of comfort for some and not inspire them to look for work.
Extending the programs for a year would also boost the economy $1.10 for each dollar of cost since the recipients would soon spend those funds. GDP would rise by 0.2 percent and 300,000 jobs would be added, according to CBO.