Sunday, August 2, 2009

As Failed Corporations are Kept Alive, the Social Safety Net Must Grow…

Funny, but since Chrysler was bailed out, how many new and competitive auto makers have you seen sprout up in America? None? Could it be that giving capital to companies with failed business models isn’t such a good idea (unless you are a banker who holds their debts)?

And in the end, the company with too much debt and a failed business model dies anyway sending more and more Americans into the safety net that is unemployment. The current crisis is now so large that even 79 weeks of benefits is not enough:
Prolonged Aid to Unemployed Is Running Out

Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

Because of emergency extensions already enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid.

Tens of thousands of workers have already used up their benefits, and the numbers are expected to soar in the months to come, reaching half a million by the end of September and 1.5 million by the end of the year, according to new projections by the National Employment Law Project, a private research group.

Unemployment insurance is now a lifeline for nine million Americans, with payments averaging just over $300 per week, varying by state and work history. While many recipients find new jobs before exhausting their benefits, large numbers in the current recession have been unable to find work for a year or more.

Calls are rising for Congress to pass yet another extension this fall, possibly adding 13 more weeks of coverage in states with especially high unemployment. As of June, the national unemployment rate was 9.5 percent, reaching 15.2 percent in Michigan. Even if the recession begins to ease, economists say, jobs will remain scarce for some time to come…

So, we prop up businesses who fail and now we indefinitely prop up the people who worked for them:
Transcript: Treasury Secretary Timothy Geithner

STEPHANOPOULOS: And that means unemployment will remain high for the rest of this year. At the same time we're seeing reports that up to 1 and a half million people could be losing their unemployment benefits by the end of this year. Does that mean that the Administration is going to have to look at extending unemployment benefits again?

GEITHNER: I think that is something that the Administration and Congress are going to look very carefully at as we get closer to the end of this year . And that's going to be one important thing to look at.

All I can say is that people who don’t work and get paid have no incentive to overthrow their government, that’s for sure. Think about it.