As John has noted, the new unemployment numbers are not good news, with the rate moving up slightly in November to 9.8 percent. But the White House will likely use the uptick in unemployment as an effective bargaining tool to insist on yet another extension of unemployment benefits. Workers who lost their jobs used to be able to count on only 26 weeks of unemployment insurance — benefits paid for by employer taxes to states and administered through taxes paid to the feds. But we now have 99 weeks of UI available to the unemployed, the additional 73 weeks paid for by the feds. But the federal guarantee ran out on Dec. 1, and the White House wants to extend it for another 13 months in return for agreeing to a temporary extension of the Bush tax cuts.
It’s hard not to sound like Scrooge to suggest that extending benefits is a bad idea — but it is. Most economists agree that extending benefits can actually increase the time workers remain unemployed, which is reason enough to resist the pleas for yet another extension. Extending benefits also means higher UI taxes for employers. There have been steep increases in UI taxes over the past couple of years in many states, as state trust funds for benefits have been depleted. Employers who might want to hire new employees end up instead paying more for workers who’ve been let go. Once again, the Democrats demonstrate that they don’t have a clue about how to create jobs. But the politics of this one are probably too difficult for Republicans to resist.