If we need any more proof that the White House does not understand economics, Carney today added more evidence. Carney: Unemployment Benefits Could Create Up To 1 Million Jobs. The WSJ asked how unemployment benefits create jobs. Carney then ridiculed the reporter for not understanding the obvious fact that it does create jobs. Note to Carney: when a reporter asks a question its because they want the Administration's perspective not the journalists. But Carney goes on to say "And with unemployment insurance, that way, the money goes directly back into the economy, dollar for dollar virtually". What he means is that the person receiving benefits is going to spend the money on some economic activity.
Carney left out where the money came from (Politicians always leave out the source of funds). The money came from taxes on someone else that was planning to use the money. Or it came from borrowing money from someone else. Its a ponzie scheme to tax a grocery store, process the money through the government, to pay to an unemployed person, so the unemployed person has money that he can then spend to buy something at the grocery store.
Furthermore, if you take a $1 from someone and process it through the federal government you have to pay a lot of overhead to be sure the dollar goes to a truly worthy person. It also takes time for you to move the money, issue checks, etc. All along the way there are people getting paid to move the money, which is a form of economic activity but its really not a multiplier like investing in a iPad software company that generates a product that it exports around the world, garners profit, and then spends that profit hiring people to do work in the United States.
Long Term unemployment insurance discourages people from looking for jobs, decays their skills, and makes it harder for them to find a job of equal caliber to the job they had before. Mr. Carney needs to work a lot harder to explain really why the Administrations use of a dollar for unemployment insurance is better for the economy that having that dollar go into R&D, business growth, or direct use by the original holder of the dollar.
