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Can the Stimulus Aid Curb the High Unemployment Rate?

March 11, 2010

The US Senate has recently passed a stimulus bill worth $138 billion that would extend jobless benefits and curb the high unemployment rate in the country.

However, some critics said that this ambitious plan will further increase the budget deficit and hurt the economy.

While such concern is valid, several analysts believe that the stimulus plan may be the only way to address the high jobless rate in the country. This can be done by giving tax breaks to companies so they will not be forced to lay off workers.

The stimulus bill, which is authored and supported by the Democrats, will also inject more than $25 billion funds to the Medicaid program and some states that are facing a looming budget deficit.

With this, millions of disabled workers can still receive health assistance from the government. However, the Medicaid funding will only continue until the second quarter of 2011, and after this period, states with large budget deficit may find it hard to “make ends meet.”

While the stimulus aid can address the problem of high unemployment rate, this may be a palliative solution especially when the economic recession is rooted in several factors and not just in weak labor market.

If the federal government really wants to pull the country from recession, it should tap the industries which have a potential including tourism, business process outsourcing, and agriculture.

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