Where are all these handouts coming from?

A rather heated debate seems to ensuing — in fact, it ensues about every 90 days, merely growing louder at each iteration — about whether the Congress should again “extend unemployment benefits” for the unemployed.

The question that draws the most attention, understandably, is whether this is a good idea. As usual, the main question is of less concern to me than a supposedly “minor, related” concern.

For the record, I understand most of those who are unemployed are unemployed through no fault of their own, and that finding a job during this (government exacerbated) recession — especially an “over-the-table” job paying an income close to that to which the wage-earner had become accustomed — is a nasty and difficult undertaking. (And if you’re over 55? When does quiet desperation cross over into “going nuts”? What’s amazing is how LITTLE violence we’ve seen. Thank Americans’ inner strength and the willingness of families to pull together — not clueless, counterproductive government.)

I also understand that unemployment insurance, as generally constructed, does a much better job of “making whole” the $15,000-a-year worker than the $75,000-a-year worker — something that ought to be fixed.

I was “on unemployment” myself, several times, in my younger days. The rigmarole our government masters (usually in the form of overweight social workers) put us through in order to “prove we were legitimately seeking work,” was as absurd as most government undertakings. Like magic, however, most of us tended to find a new job — even if it wasn’t our “first choice” job, at “first choice” pay — on a date curiously close to the date when our unemployment insurance benefits were scheduled to expire.

Today, the taxes and regulatory burdens set by government on any business attempting to “create a new job” are so onerous (what will my health insurance obligations be? What could the ADA cost me? I have to withhold and match payroll taxes, on penalty of imprisonment, HOW often?) that it’s a miracle anyone finds work — other than “under the table” work, where there sure ain’t no benefits.

Nonetheless, the macroeconomic truth is that continuing to hand money to people as compensation for being unemployed — while artificially propping up wages and prices at inflated levels — merely prevents the needed economic correction. The best way for the nation to recover from the misallocation of resources caused by real estate and stock market “bubbles” would be to slash government taxes and regulations, allowing both existing businesses and new entrepreneurs to hire all kinds of people at much LOWER starting wages, without even bothering to tell the government what they’re up to.

(Why should there be a difference between “over the table” and “under the table” work? Why is the latter, even if sporadic, generally so much easier to find? These are all artifacts of the punitive and intrusive “personal income tax” code — phrases that would have had no meaning a century ago, when the American economy was growing by leaps and bounds.)

Most folks I know would rather have honest work, even at lower wages — working longer hours or even two jobs, if necessary. But Washington — goosed by the unions who now “own and operate” so many congresscritters — says “No way.”

None of which is my main point today.

My main point today is: Why do we let them get away with calling this an “extension of unemployment benefits”?

When you take a regular, above-ground, “payroll with-holdings” type job (of which on these shores there are going to be fewer and fewer, and eventually none other than for unionized bureaucrats, just as there are hardly any more “private pension plans,” for which you can thank the statists with all their endless add-on mandates), your employer pays “unemployment insurance” premiums on your behalf. (In some states, you’re told that you, yourself, match your employer’s “contribution.” That’s a bunch of bull. It all started out as your employer’s money, didn’t it?)

As with any insurance policy, the “benefit,” should it be triggered, is known in advance. The rates for that insurance policy are set by actuaries, who study and calculate what the chances are that X number of workers each year will find themselves unemployed for as much as 13 weeks, or 26 weeks, or whatever level of “temporary income loss” the insurer is agreeing to “cover.”

When Congress says, “Hey, pay them for 39 weeks. No, we changed out minds, pay them for 52 weeks. No, no, for 78 weeks,” do they send the actuaries scrambling back to increase the premiums now being charged the employers of existing workers, so that the income drawn from those premiums will now cover 78 weeks of unemployment?

I don’t think so. I don’t think they’re “extending unemployment benefits,” at all. I think these are just cash handouts — income transfers from the taxes of those still working, without regard to the premiums collected in the past.

Imagine I total my car. My insurance company tells me it was worth $5,000 (that’s high — you haven’t seen what I drive), and that a $5,000 payment is thus all they’ve contracted to pay me in exchange for those premiums I’ve been sending in all these years. I accept their $5,000 check. Then, the next month, I call my congresscritter and say, “Times are tough. I’d like to have my ‘auto collision insurance extended.’ Please send me another $5,000.”

Assuming my congresscritter is an economic idiot (is that such a stretch?) he or she says, “What a great idea. People are suffering. People who vote. I can make myself popular. Let’s dig into current tax receipts and mail everyone whose car was wrecked last month an extra $5,000.” Pretty soon I’m calling my congresscritter every month, and getting another $5,000 from the government every month.

It sure helps. They’ve bought my vote, and my silence. (You think I’m going to squawk and risk ruining this deal?) But is this really an “auto collision insurance extension”? My insurance company got done paying me what it had contracted to pay me long ago. If the government was really forcing GEICO, or Travelers, or State Farm, to send all their recent past claimants an extra “total value” check every month, forever, they’d soon be bankrupt. I don’t think that’s what’s happening. I think the government is just printing money as fast as they can, and sending it anywhere they can think of, to keep everybody off their backs while they try to figure out which wacky new “bailout” or “slush fund” to try next.

Problem is, that’s not speeding up the needed economic correction — it’s pushing it off indefinitely … while inflating the currency into something more closely resembling Monopoly money.

Let’s just call things what they really are — that’s all I’m asking here. Once you’ve been paid the maximum benefit calculated when the actuaries set the premium rate for your “unemployment insurance benefits,” there’s no way to “extend” them … no matter how nice that makes things sound.

This hush money is coming from somewhere else.

One Comment to “Where are all these handouts coming from?”

  1. Caleb Says:

    Are you telling me i can’t get something for nothing? I’m sure you don’t REALLY mean that, do you?
    Now you are sounding like my parents! They used to always say “Be sure to always put something away for a ‘Rainy Day’!”
    They never understood that you can just make the RICH pay a little more of their fair share!
    I have trouble believing in this day and age, that you still cling to such outdated notions as ‘Personal Responsiblity’! A pox on you!
    By the Way, the Emperor’s Robes are absolutely luxurious, and if you can’t see that, there is no place for you in OUR Brave New World!