Unemployment Payments: From Trickle-Down to Trickle-Up

by Tony Chavira

It’s illuminating how often I’ve read comparisons between Barack Obama and Ronald Reagan, particular regarding their ungodly abilities to inspire people. Obama is a fantastic orator, and Reagan was called the “great communicator.” Obama inherited a terrible economy with unemployment over 7.8% percent [I apologize for my previous misspost of 10%], and Reagan did as well. Obama’s approval rating is at an all-time low, and so was Reagan’s two years into his presidency. And Obama is pulling together record debt for our government to support American industry, and so did Ronald Reagan.

But the industries each president decided to take on are so dramatically different that it’s infuriating to reflect on them. Those Reagan championed directly with appropriated money were primarily military-industrial, and he boasted a record debt each year of his presidency for his “Victory Through Strength” policies, used to fund such constructive strategies as the Star Wars program and the nuclear arsenal buildup. Today, Reagan is seen by some as a genius of the highest caliber for essentially increasing the military budget by 43% more than we had spent in Vietnam, stockpiling weapons of mass destruction, and then asking our enemies if they feel lucky. Naturally, these expensive “defense” programs were paid for with gigantic loans (which also increased every year) and were not at all accommodated for by his tax policies (which were, simply, lower taxes across the board). Although 20 years of Reagan’s tax-cut-for-the-rich trickle-down economic policies have clearly failed, as Obama has struggled to find money for programs that will help the American people on a day-to-day basis since his first day in office, some people out there still somehow consider Reagan an economic genius.

Obama—so far—has accumulated debt on top of former president Bush’s with a firm commitment to reinvest in the country’s infrastructure, and this is an obvious problem for people who want a limited government with an unlimited defense budget. Investment in infrastructure can feel like an undeserved gift to some people and a long-awaited relief to others. Were this an ideal world, financial investment would have been equal across the board from the very first American budget, from poor communities in rural Alabama to the most expensive neighborhoods on Manhattan Island. But it isn’t an ideal world, and those with money found a way to route more of it into their neighborhoods. One could argue that it’s a type of Darwinism; that those who have succeeded deserve all the spoils in this social/evolutionary battle. But that argument deliberately ignores the fact that everyone contributes to the tax system. So anyone arguing that “the victors get the spoils” may not be thinking very clearly about where all of the spoils came from in the first place.

With all of this in mind, President Obama is trying to figure out a way to extend unemployment insurance to those who still cannot find jobs in America. Right now there are almost 14.6 million unemployed people in the United States who are able to work, but only about 3.2 million job openings. Unemployment payments for those who are still looking for jobs (and can prove it) are running out, and there’s contention about whether Congress will approve an increase of $34 billion to continue these payments. Our president believes that extending unemployment by borrowing this money and adding to the debt is both necessary and correct in order to re-infuse the economy with funds. Republican congressmen, in most cases, believe that giving money to the unemployed eliminates the incentive to work.

Aside from the obvious assumption that Republican party members can understand the collective psychological state of everyone accepting unemployment payments, there is an even bigger problem with the argument that this money doesn’t contribute to the economy. In a sort of trickle-up way, money given to people who need to make their monthly payments (remember, they don’t have jobs) will go directly back into the economy. Unemployment checks rightfully go to pay for food, shelter, healthcare, schooling, or whatever, and do not (compare this idea to Reagan’s “trickle-down” theory) go into the pockets of fat cats who’ve never encountered a person making less than $500,000 in their lives, except to bark orders at them.

Unemployment benefits are the most direct way to begin moving the economic engine forward: you know the money will be spent (since it’s the recipient’s only income), you know the areas it will be spent in (since we can track where the money goes), and you know the sectors which will benefit directly (mostly services, housing and food). And unlike Reagan’s failed economic policies, the money has the unique ability to actually “trickle” in some direction, through the purchase of basic necessities and the maintenance of certain property values.

I’m not going to deny that providing unemployment benefits takes away the incentive to work for some people. That’s the nature of these kinds of programs. But to make the bold assumption that 100% of people who need to pay their bills are just lazily sucking on some government teat for sustenance is totally ridiculous, especially when you see how actual people on unemployment are forced to budget themselves with their minimal monthly payments. In fact, I could make the same argument that everyone should stockpile their own nuclear arsenal instead of relying on the nanny-state to give them a military.

Above all of this, the economic reality of unemployment payments is that they do create jobs, as money flows through the economic system for services marketed and goods geared toward people on a budget. It’s sad that this service area only arose to prominence after we experienced an international financial meltdown, but at least it’s there now.

The compassionate reality of this situation is that some people just need help. You pay taxes to your government as a form of social insurance; that the government will take care of some things for you, and make sure that we have as high a quality of living as we can collectively develop. When your government doesn’t do that for you, you need to make sure it does ... as you would call to collect from any insurance agency. The business of running a government may have increased our national debt to a terrible state, but tough shit. You pay your taxes, and when you need help you should be able to get it somehow. If you’re an American citizen, you’re entitled to it. At the very least, you’re entitled to it more than someone receiving American aid in Afghanistan.

Those who think it’s a handout or that the unemployed are lazy or weak or should be discarded never really understood what it was like to be desperate. If they did, they’d be surprised at how much a few dollars a month could matter to their lives. No one enjoys desperately needing help, but the reality of a democratic republic is that it should be there to provide it.

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