Hoover, take two

George Will thinks we need to stop extending unemployment benefits because it just subsidizes unemployment: clearly, those who have been unemployed for 99 weeks are choosing to live off their unemployment checks instead of filling all those empty jobs that are available. Alan Greenspan is warning us that the bond markets are going to put a halt to U.S. borrowing, and the fact that treasury yields have gone down lately is a sign that the problem is even more real than we think. No wonder Paul Krugman thinks that we could be on the precipice of a third Depression.

The Obama economic team hasn’t been hitting all home runs with regards to dealing with the current crisis. “Cash for Clunkers” and the new homebuyer tax credit weren’t exactly great ideas from an economic point of view. But even with Obama’s missteps, the comments of Will and Greenspan show that the alternative is much worse. It’s as if a large chunk of our political leadership wants to give Herbert Hoover a second try. This is what scares me the most about a possible Republican takeover in Congress this year.

Long-term unemployment is a crisis. Deficit chickenhawks (to borrow a phrase from the Iraq War) like to complain that budget deficits affect generations, but so does long-term unemployment. When people are unemployed for a year or more, they lose skills, they become less employable, and worst of all, their kids suffer. This leads to poverty, and more importantly, lower tax revenues, for years. How will we solve the budget deficit when everybody has to move to a $7 an hour job? How much in taxes does that generate?

We can put at least some of these people to work. Our national infrastructure is crumbling. Build some bridges, fix some sewer systems, create a smarter electric grid. Anything to get people back to work, maintaining their skills, and providing stability for their families. Hooverism didn’t work the first time around, why should we try it again?

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