Unemployment Programs Reduce Incentive to Work

Basic economics pretty much sums up what happens when we give richer and longer unemployment benefits to people that lose their jobs...they are less motivated to go back to work thus they stay unemployed longer leading to more federal and state expenditures to pay their benefits. This in turn leads to increases in state unemployment taxes - 2010 saw record increases by the way. The higher taxes raise the cost of hiring workers and thereby reduce the jobs available and contribute to higher unemployment.

Anybody see how this becomes a viscous cycle very quickly?

The Wall Street Journal recently ran an article discussing this and interestingly enough one of the people quoting on this phenomenon was Laurence Summers - one of Obama's top economic advisers....interesting.