Tax Deal Shows Obama Doesn’t Understand Incentives

Most of the focus on the recent federal tax deal centers around the need to extend the Bush tax cuts. This posting focuses on the unemployment extension for 13 months starting January 1, 2011. It would seem that Obama is trying to keep the nation’s unemployment rate elevated well into his re-election campaign. This is one instance of bad economics and bad politics being one and the same.

After all, in spite of the financial crash, in spite of Obama’s (and Bush’s) over-spending, and in spite of our nation’s horrible financial condition, the economy is bound to start growing and thus creating jobs over the next year. Obama’s unemployment extension (some will now have gone more than 3 years without working and yet receiving unemployment under this compromise) would seem to be a great way to keep the unemployment rate well over 9.0% (it is now at 9.8%) well into his bid for re-election in 2014. Is this really what he wants?

Rather than a blanket extension of unemployment, Obama (and Congress) could have added requirements that workers pay back some portion of their “unemployment insurance” once they find work, but no such requirement seemed to receive serious consideration.

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3 Replies to “Tax Deal Shows Obama Doesn’t Understand Incentives”

  1. You say “the economy is bound to start growing”, but I think this is purely speculation. The economy requires huge volumes of cheap oil to operate and post peak oil will more likely gradually force global economies to contract. Support of once-working people’s incomes is a small price to pay for lousy and reckless financial and administrative policies in the past that created bubbles and our current situation.

  2. Osama is not stupid! Hes buying votes from the lazy welfare-entitlement minded folks that elected him !Couples living together make more off of unemployment,child-welfare,Wic etc than working for $10.00 an hour like the Illegals do,Look for the Saviour to extend the unemployment money after the 13 months are up,He and his cohorts have to stay in power after 2012 !!LOL

  3. Can’t blame this all on the Bush administration. Congress was ruled by the Liberal-Left 1007 and 1008 did nothing to slow down spending,block fannie maa of freddie mac financing homes for people that couldn’t pay for the utilities ,much less the home payments. Couldn’t afford to buy in first place NOT enough income to qualify but sold to the fools anyway,everyone has to have a home ???

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