Unemployment insurance provides unemployed Americans with crucial economic security while they look for jobs. But while campaigning in Michigan, Mitt Romney continued to attack President Obama’s push to extend the program while his campaign spokesperson slammed unemployment insurance in much harsher terms:
[O]ne of President Obama’s top advisors said that unemployment stimulates the economy. That’s like saying an iceberg stimulated the Titanic. Only in White House fantasy world do debt, unemployment, and higher taxes stimulate the economy.”
The fact is that, along with providing crucial economic support for Americans seeking work, the unemployment insurance program actually gives a tangible and significant boost to the economy:
An independent study found that every dollar the U.S. spends on benefits for the unemployed offers an overall return of $1.61 for the economy. The return on tax cuts like the Bush tax cuts, however, give a much smaller rate of return—32 cents’ worth. The impact of such tax cuts is so low because, as the Center for Budget and Policy Priorities pointed out, “upper-income people have a higher propensity to save additional income that they receive and a lower propensity to consume. As a result, channeling a dollar of federal revenue to them during a recession or economic slowdown is a very inefficient way to stimulate more consumer spending and to thereby spur economic growth and job creation.”
The Council of Economic Advisers estimates that, without unemployment insurance, the economy would generate 478,000 fewer jobs by the end of 2014.
Unemployment insurance kept 3.2 million Americans from falling into poverty in 2010, increased GDP by $315 billion overall from the start of the recession through the second quarter of 2010, and kept an average of 1.6 million people on the job each quarter during the recession.
To support the economic recovery, President Obama recently secured an extension of unemployment insurance along with extending the payroll tax cut for all 160 million American workers. Romney, however, has suggested ending the program as Americans know it.
Romney and his team would like everyone to believe that unemployment insurance has no role in our economy, but—once again—the facts prove otherwise.