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The credit crunch and unemployment benefits

Alan Krueger of Princeton is testifying today before the Senate Health, Education, Labor and Pensions Committee. Here’s an interesting point he makes in his testimony:

….it seems to me that the credit crunch that the economy is currently experiencing presents a unique situation in which a temporary increase in the level of UI [unemployment insurance] benefits may be particularly timely…..Even with UI benefits, many of the unemployed are forced to borrow to pay their bills. Borrowing is difficult in the current credit crisis. In addition, many adjustable rate mortgages are resetting, requiring higher monthly payments. It seems to me that even the short-term unemployed will face pressure meeting mortgage payments. A temporary increase in UI benefits can help to forestall mortgage foreclosures for a vulnerable population.

I like it.

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