Rand Paul made some rather bizarre statements that at first do not seen true… This is an attempt to tackle them logically and see how in what context, they could possibly be true…

His subject was the extension of unemployment benefits.

“I do support unemployment benefits for the 26 weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers,” he said… “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Paul argued.  “You get out of a recession by encouraging employment, not encouraging unemployment.”

First… Take his statement:  “I do support unemployment benefits for the first 26 weeks…”  He is talking about state money, not federal.  Federal money starts on the 27th week.  So at issue is who will pay for it.  From the point of the Treasury, since employers pay unemployment insurance into the state, and the state pays the unemployed, essentially employers are paying the unemployment, and not the government… Of course sometimes the cost may outweigh the income and shifts have to occur. However it is in no way nearly as costly as using all Federal money, all of which comes from taxes, to pay for those people who cannot find work….

So from the Federal Governments role, not extending benefits initially looks good on its balance sheet…

Now let us look at it through economics…  You have someone maybe or maybe not trying very hard to earn a job…. In any regards he doesn’t have one… So from the 26th week to the 27th week, this happens.  His income goes from $330 (Delaware’s maximum) down to zero….  He files for SNAP (food stamps), Medicare, TANF (cash assistence) and utility payments.  Most likely, with zero income he will be eligible.  There will probably be a two to three week delay before the payments go into effect, and they will be paid with all the back pay up to when the request was processed.

Now, to keep TANF, this person must undergo a forced regime.  They must show up at a service such as the Salvation Army or Career Team, and go through seminar training for roughly the equivalent of a work week.  They get times for interviews and resumes, and have coaches helping them find employment…They undergo internships.   This impedes their time looking for additional work… If one is required to spend the day in class, it makes going to an interview rather difficult…  It sort of makes it harder to get a job for the same money that just getting unemployment would allow….

So the idea that cutting unemployment is economical for society is bogus.  It completely forgets to factor in the cost of assistance that would be required.  Essentially from an economics standpoint, it would not fund the supplicant from one fund, but would be doing so from another….  The one fund would need to be funded by additional revenue.  The existing fund, would have to figure how to pay for the extra demand off of their limited resources…

In review, this idea does not work well on either the deficit’s or economic level.  It simply moves the cost to another department, and that is actually more costly by the time one factors TANF, Medicaid, SNAP, and subsidized utility payments.

The only way cutting unemployment could work, is A)  it forced someone to get a job, and B)  the person disappeared off the grid and cost no one anything….

I cannot but help think, that the premise for Rand Paul’s argument, is based on the assumption that people are free-loading on unemployment.  He is calling them out by implying  sure they are going through the motions of looking, but they are acting like they are on vacation….

For it can only if that premise is taken, then the removal of benefits miraculously causes everyone to walk up and get a job and live happily ever after… Further more, I sense morality making a play here… The idea that getting money while not producing is unhealthy for our country, seems to be the driving force here…

If you extend it beyond that, you do a disservice to these workers,” he said… “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,”

The idea clearly stated, is that the perpetual unemployed group in our economy, exists because people are on unemployment.  Other factors are irrelevant… such as no new jobs,  such as old people suck; let’s hire new ones, such as the jobs we have are in Missouri; you’re in Delaware. All of these factors are simply dismissed.

If you want a job, Rand Paul’s stated assumption goes, you just have to go ask and they will give it to you, no questions asked.  Only because you are unemployment, have you not only not gotten a job, but neither have you sufficiently looked…..

Are the jobs really there?

Let’s look at numbers….  Four days ago it was released that 230,000 new jobs grew  in November. it surprised everyone. Unemployment dropped 3 tenths.  The total number of unemployed  dropped down to 10.9 million.  The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.1 million in November. These individuals accounted for 37.3 percent of the unemployed. The number of long-term unemployed has declined by 718,000 over the past 12 months.

So, 4.1 million of the 10.9 million are either at or over 27 weeks of being unemployed…  if Rand Paul gets his way and benefits suddenly stop, 4.1 million shuffle onto on assistance instead of getting unemployment….  Rand Paul was expecting them to get work…

Let is demonstrate how long that would take….

4.1 million unemployed  – 230,000 monthly new jobs  =  3.87 million unemployed left without benefits in January 2014

3.87 million                        -230,000 monthly new jobs  =   3.64 million….          February 2014

3.64 million                       -230,000 monthly new jobs  =   3.41 million…..           March 2014

3.41 million                       -230,000 monthly new jobs  =   3.18 million…..            April 2014

3.18 million                       -230,000 monthly new jobs =    2.93 million…..           May 2014

2.93 million                      -230,000 monthly new jobs =    2.70 million…..            June 2014

2.70 million                      -230,000 monthly new jobs =    2.47 million…..            July 2014

2.47 million                      -230,000 monthly new jobs =    2.21 million…..             August 2014

2.21 million                      -230,000 monthly new jobs =    1.91 million…..              Sept. 2014

1.91 million                       -230,000 monthly new jobs =    1. 68 million….             Oct. 2014

1.68 million                      -230,000 monthly new jobs =     1.45 million…               Nov. 2014

1.45 million                      -230,000 monthly new jobs =     1.22 million…              Dec. 2014

1.22 million                      -230,000 monthly new jobs =     920,000……                Jan. 2015

920,000                            -230,000 monthly new jobs =    690,000 …..                  Feb. 2015

690,000                            -230,000 monthly new jobs =    460,000                          March 2015

460,000                            -230,000 monthly new jobs =     230,000                          April 2015

230,000                            -230, 000 monthly new jobs =    full employment….     May 2015……

Of course this is only theoretical. If real,  it would take much longer because one would have to factor in all the new perspective job seekers entering the job market each month,  as well as factor the ratio of which the new get hired versus old, etc. and obviously it would take much longer than just this scenario implies…..

But the fastest we could ever hire all of those long termed unemployed is a year and a half….

A year and a half with no income.  Even if looking for work regularly, and someone took a slot before you, it could be a year and a half until another slot opens up where you could finally be employed….

Those who say, one can get a job delivering papers,  in the meantime, are forgetting that there already are 7.7 million part-time workers due to the economy,  already working those jobs, and looking for full time employment as well…

So it appears that simple math proves Mr. Rand Paul wrong.  Keeping unemployed workers on unemployment benefits is not providing a disservice to workers, it is doing the opposite;  but cutting them off and leaving them with no money while they try to find work  across a full year and a half is what would truly provide perhaps the greatest disservice to workers….

Rand Paul erred in his math.

Now this may be esoteric for most, but for me, this was the most intriguing aspect…  (So instead of ending with a bang-up finish, this post will fade away ethereally..).   Remember that unemployment benefits are taxable income… So if unemployment is extended past 27 weeks, the net cost over a year will be less because some of that comes back as taxes…   So if one takes that calculation into effect, and at a 10% rate which is low… $33 dollars of every $330 Federal Unemployment check comes back, meaning the economy is being boosted by $330 dollars, at only a cost to the Fed’s over time, of  $297….

The average benefit per person on SNAP is $133 dollars.  Medicaid costs and average of $166 among low income people.   Rand Paul’s plan would increase these two items to $299 per person,  to save in another category, $297 per person…..

It appears the only thing Rand Paul has going forward in his favor, is the cultivation of  anger against people terminated by the past Recession who cannot get rehired and must wait for the economy to grow…..”How dare they take our money!”  The math behind his assertion, agoes completely against him….

But to his defense, he did say something of merit:  “You get out of a recession by encouraging employment, not encouraging unemployment.”

Increasing the size of government would do far more to get people off of long term unemployment benefits, than cutting them off cold turkey. Adding 100,000 new Federal government career jobs each month, would do wonders all across the economy. Don’t think Rand will have any of that, which is why the economy will only putt along until Congress allows the Federal Government to again start hiring …..