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Economist Art Laffer says extending unemployment ‘will not make the economy healthier’

Renowned Reagan-era economist Art Laffer pushed back Wednesday on the Democratic talking point that limitless unemployment benefits help limit unemployment, claiming that continuing benefits ” actually do increase unemployment” and “will not make the economy healthier.”

The author of the famous Laffer Curve spoke with Fox News’ Jenna Lee and American Enterprise Institute scholar Michael Strain about how to improve America’s unemployment rate, which remains stubbornly stuck at around 7 percent (though many claim real unemployment is much higher).

“Emergency” unemployment benefits finally expired last month, prompting a furious fight on Capitol Hill this week. Republicans refuse to vote for benefit extensions without offsetting cuts elsewhere, while Democrat want the benefits paid for through borrowing.

Laffer actually agreed with Strain’s contention that Congress should extend the benefits, though his reasoning appeared more political than practical. “Long-term unemployment benefits actually do increase unemployment,” he began. “I don’t think anyone disagrees with that. What I think Michael says is also correct; these people are in very bad shape not through their own doing, but because of the horrible policies of Bush in his last two years of office and the continuing bad policies of Obama.”

“If I were in the House or in the Senate, I probably would vote to extend these benefits,” he continued, “but they will not make the economy healthier. What I’d like to see is a low-rate flat tax, spending restraint and sound money, and get economic growth back into the system so we don’t need to have these long-term benefits extended.”

The economist is perhaps too generous to his opponents when he claims no one thinks federal unemployment benefits increase employment. Democratic Senator Barbara Boxer said as much on Tuesday, as have other prominent politicians on the left.

In fact, even the “nonpartisan” Congressional Budget Office claimed in December that “extending emergency unemployment benefits would raise gross domestic product (GDP) and employment in 2014.” The head of President Obama’s economic brain trust last week claimed extended benefits would create 200,000 jobs and add “a fifth of a point to additional economic growth. (RELATED: Gene Sperling issues panicked call for extended unemployment benefits)

Laffer also lashed out at the idea of a federal minimum wage, saying it “makes no sense whatsoever to me.” He repeated his long-standing charge that the minimum wage is “the Black Teenage Unemployment Act,” saying it shuts teenage and minority workers out of the labor market by restricting the number of low-skill jobs available. “I’m very much — at least for teenagers — getting rid of the minimum wage, so we can bring them back into the labor force, get them the skills they need so they can continue being productive members of our society for years and years.”

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