Via CNS News and our friend and Townhall colleague Greg Hengler, Nancy Pelosi lectured America on macroeconomics yesterday by insisting that an extension of unemployment benefits would “make a difference of 600,000 jobs to our economy.” Greg recalled a similar claim from Pelosi about ObamaCare, and adds it to the end of Pelosi’s claim from yesterday:
“Christmas is 10 days away,” said Pelosi at a press briefing on Capitol Hill today. “The president and Democrats in Congress have been very clear. We’re not going home without enacting a payroll tax cut for America’s working families and extending unemployment insurance for millions of Americans.”
“The payroll tax cut that the president proposed would put $1,500 in the pockets of 160 million Americans,” she said. “The unemployment insurance extension is not only good for individuals. It has a macroeconomic impact. As macroeconomic advisers have stated, it would make a difference of 600,000 jobs to our economy.”
Pelosi did not name those “macroeconomic advisers.” She continued: “Again this is important because this is about the safety net not just for these individuals, but for our economic system that, in times of unemployment, we have a safety net and that is important.”
“Again, [not only] a safety net for individuals, but a safety net for the economy,” she said, “and again this money when received is immediately spent, it’s urgently needed, and injects demand into the economy, creating jobs.”
This is a fairly testable hypothesis. The last time Congress extended the jobless benefits was a year ago, in another crunch-time compromise between Republicans and Democrats on Pennsylvania Avenue. Since then, the economy has added about 1.5 million jobs — an average of 125,000 a month, which is only enough to keep up with population growth. Assuming that Pelosi’s correct and we subtract 600,000 from the 2011 numbers, the Obama adminstration’s economic policies would account for growth that falls well below that of population maintenance — at only 75,000 per month.
The number and the claim is absurd. Whatever short-term economic benefit arises from giving benefits to the unemployed is not enough to generate enough marketplace demand to create 600,000 jobs, nor would its absence be enough to eliminate 600,000 jobs, either. Its absence would probably force the long-term unemployed into part-time and low-paying jobs to maintain themselves, which would not only service much of that same demand, it would also not take capital from the future — where its absence will cost jobs. There are social and humanitarian reasons for providing unemployment benefits, but job creation and economic growth are not among them.
At least, though, we can say that the deal Pelosi makes here is much better than ObamaCare. That will cost $2 trillion in its first ten years, according to the CBO, which works out to five million dollars a job. Sheesh! Even Obama’s green-tech boondoggles have a better price-per-job than that. With the proposed extension of jobless benefits expected to add $44 billion, that works out to $110,000 per job … which is still a ridiculous figure, and shows why capital is used more efficiently when left in the marketplace.