Senate Needs to Extend Unemployment Insurance, Food Stamps in Stimulus Package

by Tula Connell, Jan 30, 2008

A stimulus package is a good first step toward alleviating the nation’s multipronged economic crises. But the $150 billion economic stimulus package passed by the U.S. House this week is lacking two critical items: extension of unemployment insurance and expanding food stamps.

A new report by industry research firm Moody’s Economy.com agrees with many economists in finding both would provide the “biggest bang for the buck” to the economy. The AFL-CIO’s short-term stimulus plan released Jan. 18 also calls for extending the number of weeks job seekers receive unemployment benefits and expanding food stamp coverage. Another key point in our plan is fiscal relief for state and local governments to avoid the economically depressing effect of tax increases and budget cuts.

The U.S. Senate today begins looking at the possibility of both those measures. (You can click here to tell your senators to extend unemployment benefits in the economic stimulus package.)

Expanding food stamps would be the fastest way to infuse money into the economy, Moody’s economist Mark Zandi told CNN:

If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need - groceries, to pay the telephone bill, to pay the electric bill. 

For every dollar spent on the food stamp program, Zandi said, $1.73 is generated throughout the economy.  

The economy would next benefit most if unemployment benefits were expanded. For every dollar spent here, the economy would see a return of $1.64, said Zandi. 

Since Bush took office, the length of time workers spend seeking new jobs has gotten longer and longer. In spring 2001, when the nation went into recession, the long-term joblessness rate (more than 27 weeks) was 11 percent. Last month, it had worsened to 17.5 percent. According to USA Today, more than 1 million workers will run out of unemployment insurance between now and June.

In putting together the report, Moody’s tracked the potential impact of each stimulus dollar, looking at tax rebates, tax incentives for business, food stamps and expanding unemployment benefits.

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