Congress should include a temporary increase in unemployment insurance in the stimulus package. Unemployment is already rising. During a downturn, the number of unemployed is likely to grow, as will the length of unemployment spells. The increased needs will put greater stresses on state unemployment insurance programs, just as unemployed workers and their families will be struggling to pay their bills.
Expanded unemployment benefits are particularly effective as a stimulus because unemployment insurance recipients will quickly spend their benefits. A stimulus package should provide for an extension of benefits to those who otherwise face exhaustion.
Temporary provisions that also would broaden eligibility and increase benefits should be given strong consideration. In fact, the Congressional Budget Office “does not anticipate that many unemployed workers who exhaust their entitlement to regular benefits will be in states that will have met the criteria for triggering the extended benefit program in 2008." Thus further changes may be required to reach these people and maintain a base level of spending in the economies of states hard hit by job loss.
For information on other economic stimulus policy ideas, see: