Rush Limbaugh Mocks Fact That Unemployment Benefits Are Stimulus

Rush Limbaugh denied that unemployment benefits have a positive effect on the economy, saying it's a “croc” that extending them translates into economic growth. In fact, studies show that these benefits stimulate the overall economy and provide greater economic impact on growth than the Bush tax cuts for upper-income earners.

Discussing the budget negotiations on his Monday radio show, Limbaugh mocked the fact that unemployment insurance spurs economic growth, saying “the people who voted for Obama believe that croc.” He went on to say that “it's magical” that unemployment benefits stimulate the economy without jobs, adding, “Of course, this is all a croc.”

Economists, however, have repeatedly pointed out that unemployment insurance stimulates the economy -- a fact Limbaugh has refused to acknowledge. Mark Zandi, Moody's chief economist and a former adviser to Sen. John McCain, ranked extended unemployment benefits behind only food stamps in terms of economic “bang for the buck.”The Economic Policy Institute created the below graph based on Zandi's figures:

Indeed, the Congressional Budget Office has shown that increasing aid to the unemployed would have a bigger impact on the economy than reducing taxes. As Economic Policy Institute president Lawrence Mishel put it: “Spending on unemployment insurance is the most effective thing you can do to stimulate the economy.” Numerous economists agree.

But Limbaugh continued to dismiss the positive effects of unemployment insurance, saying it was “patently absurd” and “as far from reality as you could possible get” to believe that these benefits create five times as many jobs as the Bush tax cuts for the richest American households.

Limbaugh added: “This is so absurd, this wouldn't even make good parody, or good comedy, because there's not one element of truth in it.”

In fact, here's what actual economists have concluded. From the Economic Policy Institute:

Extending just the upper-income Bush tax cuts would boost GDP growth by 0.1 percentage point, increasing nonfarm payroll employment in 2013 by only 102,000 jobs--far less than one-tenth the impact of continuing the temporary ad hoc stimulus measures. Continuing EUC would do three times as much in terms of GDP growth and support 300,000 to 400,000 jobs. In terms of jobs created per dollar of budget deficit, EUC is more than five times as effective as the Bush income tax cuts for the wealthy. 

EPI included this chart illustrating the difference in both approaches:

Similarly, a CBO report concluded that extending unemployment benefits for a full year would add $1.10 more to the federal budget but “employment would be increased by six years of full-time-equivalent employment per million dollars of budgetary cost.”

As the Washington Post reported, it could save as many as 300,000 jobs:

As it happens, the Congressional Budget Office just released a new report on this subject. CBO's conclusion: It would cost $30 billion to extend the program for another year. But doing so could save 300,000 jobs by the end of 2013, compared with what would happen under current law.


The report notes that extending unemployment insurance is a particularly effective form of stimulus when the economy is still struggling. That's because jobless workers who receive benefits are extremely likely to spend the money right away. So, the CBO estimates, if Congress extends all the programs, GDP will likely be 0.2 points higher and employment will be 300,000 higher at the end of 2013 than if Congress does nothing at all.