Debt Ceiling: No Strings Attached?

The ongoing debt ceiling debates shed light on our country’s severely overstretched Unemployment Benefits programs. The number of initial unemployment claims filed weekly continues to rise, proving payrolls are headed in the opposite way than economists predict and hope. Where is this so-called economic recovery?

Raising the debt ceiling will most certainly come with strings attached. If those strings don’t include raising taxes, it’s highly probable one of those strings lists a handful of spending cuts to Federal programs such as education or health programs, another targeting loans to businesses around the country. With American businesses already offshoring the country's jobs to nations where labor is cheap, if they are forced to operate on even less cash, the effect on the unemployment rate may be, to quote Federal Reserve Chairman Ben Bernanke, “catastrophic.”

The unemployment rate has been hovering slightly above or below 9% for months now. Nearly half of the states in the country have been forced to borrow money from the Federal Government to continue to pay their unemployment assistance “payrolls.” With the worsening financial crisis, companies must either stop the layoffs, or incent laid-off workers to seek new employment quickly rather than expecting the government to bankroll their lifestyles. With more Americans working, fewer depend on State Unemployment payrolls and more dollars are paid in income taxes to the Fed, contributing to the government’s liquidity.

Keeping Americans working is simply a matter of spending less on certain programs to save money. If a company is forced to displace five workers, if that company funds severance for those five workers using available State Unemployment Benefits, that company may save enough money to maintain the jobs of two other workers on the chopping block. On a grander scale, as we see now that most major corporations around the country have and are once again facing layoffs, using such a program could equal significant dollars saved by States and taken in by the Feds. More importantly, fewer Americans out of work.

Once the government reaches a decision on the debt ceiling, getting Americans back to work should be its primary concentration. There is no way to predict how the strings attached to the debt ceiling decision will affect nationwide corporations. Until the government can come to a spending and revenue decision (and to think that if the NFL can do it, so might our country’s elected officials…), organizations must take a role in controlling the unemployment rate to support the country and avoid further “catastrophe.”