Unemployment Benefits: Needed Relief or Waste of Money?

The deal to extend unemployment insurance at its current 99 week level raises a fundamental question: at what point does a helping hand from the government become a crutch?

Unemployment insurance provided by individual states covers 26 weeks on average. But the Federal Government has extended those benefits far beyond what the states have offered. Benefits have been extended seven times since July 2008. Once under President Bush and six times under the Obama administration not including yesterdays bipartisan agreement.

The Democrats mantra through it all has been, not just one of compassion for the jobless, but that the benefits help stimulate the economy. President Obama reiterated that belief during his press conference Tuesday afternoon. "Unemployment insurance probably has the biggest impact in terms of making sure that the recovery that we have continues and perhaps at a faster pace," Obama told reporters at the White House.

But many Republicans reject that concept as another way to redistribute wealth--not a way to create it.

"To think that fundamentally that if we produce more unemployment checks that somehow that leads to more employment is beyond counterintuitive," says Rep. Jeb Hensarling, R-Texas, "I mean frankly it's a little loony in my humble opinion."

But economist Gary Burtless of the Brookings Institution disagrees. "The unemployed people who are receiving unemployment checks spend the money, And the money that they spend goes to providing income to people who sell them goods and services."

And there is a philosophical divide over whether a program that provides almost two years of partial pay to the jobless, may actually encourage people not to seek work. "Labor economists of all political stripes agree that when you increase the length of unemployment benefits, you get an increase length of time that people stay unemployed," observes Heritage Foundation labor expert James Sherk,

Members of both parties agree that a robust and growing economy may be the only way to end these expensive unemployment benefit extensions. But there's a dark cloud behind a recovery when and if it comes. Some experts say many of the jobs lost in the male-dominated blue collar manufacturing sector will never return. They've been lost to cheap labor abroad and more significantly to technology.