“9.6” – One Number, Two Stories
Our national unemployment rate is at 9.6 percent. China’s national economic growth rate is also at 9.6 percent. That’s considered bad news in China–their growth rate was 11.9 percent in the first quarter of this year, and 10.3 percent in the second quarter. We’d love to have 9.6 percent growth–heck, we’d love to have 3.3 percent growth, which is what we’ve averaged since World War II (we’re barely breaking even now).
Recession would feel even worse than the slow growth we’re experiencing right now. But slow growth feels bad enough, because of that 9.6 percent unemployment. And the worst part about it is that 9.6 percent unemployment is totally unnecessary–not only because we should be growing our economy much faster, but also because Congress has passed laws that have made our unemployment rate higher than it ought to be.
In today’s Wall Street Journal, economist Robert Barro argues that unemployment would have been 6.8 percent, not 9.6 percent, if Congress had not extended unemployment benefits to absurd lengths. The research of new Nobel laureate Dale Mortensen–right here in the 9th district–confirms that longer benefits tend to produce higher unemployment, the opposite of the “stimulus” that Nancy Pelosi promised.
Barro writes that it is good policy to extend unemployment benefits during a recession (and I agree). However, he adds that the 99-week period that Congress created is so extreme that it has taken us towards the failed model of European socialism. In his estimation, 4 million more Americans are out of work today because we took away the incentive to find work. We also made it harder for small businesses to create new jobs.
We probably won’t achieve the 9.6 percent growth that China enjoys even during a “bad” period (though we have occasionally come close, reaching 7.2 percent in 2003). But we can certainly move away from the 9.6 percent unemployment that Congress has created. We should apply conditions to extended benefits, and pay for benefits from existing spending, not new debt. It’s time to vote out politicians who don’t get that!