[Washington Examiner] Now the party of Rep. Alexandria Ocasio-Cortez and "the Squad," today’s Democratic Party isn’t exactly renowned for its economic literacy. But even by the Democrats’ low standards for economic policy, Senate Minority Leader Chuck Schumer’s latest proposal is a doozy.Schumer’s new bill, co-sponsored by fellow Democrat Sen. Ron Wyden of Oregon, would extend the "supercharged" unemployment benefits provided under the $2.2 trillion CARES Act, currently set to expire on July 31, through March 2021 or until state unemployment rates fall below 5.5%.
"If we fail to renew the $600-per-week increase in [unemployment insurance], millions of American families will have their legs cut out from underneath them at the worst possible time — in the middle of a pandemic, when unemployment is higher than it's been since the Great Depression," Schumer said.
The idea here is straightforward enough: Democrats such as Schumer argue we shouldn’t get rid of expanded unemployment benefits until there is no longer widespread unemployment, or else people won’t have the resources they need to weather long periods without work. But Schumer’s short-sighted solution gets the problem entirely backward — the expansion of unemployment benefits itself is one of the biggest barriers to getting the unemployment rate back down to normal levels.
Here’s why.
The deeply misguided unemployment expansion was passed as a short-term measure at the height of the COVID-19 pandemic. It both expanded eligibility for unemployment benefits and augmented them with a federally funded additional $600 a week. Unfortunately, this made it more profitable to stay home on welfare than work for the majority of workers.
The economic ramifications of such skewed incentives are dire.