A lit­tle more than a year ago, the Pres­i­dent was dis­tressed.  It was a few days after Christ­mas 2013, and extend­ed unem­ploy­ment ben­e­fits for 1.3 mil­lion peo­ple were about to expire.  In a typ­i­cal­ly per­func­to­ry lob­by­ing effort, he called two Sen­a­tors to urge them to move a bill to pre­serve the benefits.

To recov­er from his exer­tions, he and his fam­i­ly then “ven­tured to the white-sand beach at Bel­lows Air Force Sta­tion, which is on the wind­ward side of the island of Oahu and fea­tures turquoise water and a stun­ning view of the Moku­lua Islands,” the Wash­ing­ton Post reported.

That tran­quil scene augured the best year for U.S. employ­ment growth since 1999.   Accord­ing to the Labor Depart­ment, the econ­o­my added more than 3.1 mil­lion jobs in 2014.  The topline unem­ploy­ment rate was 5.6% in Decem­ber, down from 6.7% the pri­or Decem­ber and the low­est rate since June 2008.

And here is the sur­pris­ing major rea­son for the resur­gence in employ­ment: Con­gress spurned the President’s entreaties and let extend­ed unem­ploy­ment ben­e­fits expire.

In a work­ing paper pub­lished by the Nation­al Bureau of Eco­nom­ic Research (NBER), Mar­cus Hage­dorn, Iourii Manovskii and Kurt Mit­man found that the House’s refusal to extend those ben­e­fits was the lead­ing rea­son for what they term the “2014 employ­ment mir­a­cle.”  Their study con­clud­ed that the abrupt drop in ben­e­fit dura­tion led to the cre­ation of 1.8 mil­lion new jobs, almost one mil­lion of which were filled by those who would not have entered the labor mar­ket if their ben­e­fit checks had kept coming.

The government’s unem­ploy­ment insur­ance pro­gram is a fed­er­al-state ven­ture that pro­vides 26 weeks of ben­e­fits for cov­ered work­ers who lose their jobs.  As the econ­o­my wors­ened in 2008, Pres­i­dent Bush approved a bill that tem­porar­i­ly length­ened the dura­tion of those ben­e­fits.  Pres­i­dent Oba­ma and Con­gress repeat­ed­ly reau­tho­rized these tem­po­rary exten­sions.  Until Decem­ber 2013.

At that point, the aver­age dura­tion of ben­e­fits was 53 weeks, with ben­e­fits last­ing 73 weeks in three states (IL, NV and RI) and few­er than 40 weeks in only one (NC).  In those days after Christ­mas 2013, aver­age ben­e­fit dura­tion dropped overnight to 25 weeks.  By chang­ing the rules so sud­den­ly, dra­mat­i­cal­ly and with­out regard to the eco­nom­ic con­di­tions in indi­vid­ual states, the gov­ern­ment cre­at­ed what the authors call a “qua­si-nat­ur­al exper­i­ment” on how a cut in job­less ben­e­fits would affect jobs.

The government’s own esti­ma­tors, using their best eco­nom­ic mod­els, fore­cast doom.  Unem­ploy­ment ben­e­fits, the Con­gres­sion­al Bud­get Office assert­ed, spur eco­nom­ic growth and induce “the largest effects on out­put and employ­ment per dol­lar of bud­getary cost.”  They pre­dict­ed that the unem­ploy­ment rate would aver­age 6.7 per­cent in the fourth quar­ter of 2014; instead, it aver­aged 5.7 per­cent.   The President’s Coun­cil of Eco­nom­ic Advis­ers fore­cast the loss of 240,000 jobs.  Instead, the econ­o­my added a month­ly aver­age of more than 260,000 jobs.

The authors exam­ined the link between the sud­den and sweep­ing ben­e­fit ter­mi­na­tions and the employ­ment surge.  They grouped states accord­ing to the length of unem­ploy­ment ben­e­fits avail­able before the lapse.  They found that job growth in high-ben­e­fit states (where job­less work­ers could col­lect ben­e­fits for 54 weeks or more) exceed­ed the 2014 nation­al aver­age, while growth in low-ben­e­fit states lagged that aver­age.  Job growth was most pro­nounced in states where ben­e­fit cuts were great­est.  Based on these find­ings, the authors esti­mat­ed that reduc­ing the nation­al aver­age dura­tion of ben­e­fits from 53 to 25 weeks increased employ­ment by 2 percent.

The researchers then went fur­ther, com­par­ing adja­cent coun­ties that belonged to dif­fer­ent states.  Fair­fax Coun­ty (VA), for exam­ple, is just across the Potomac from Mont­gomery Coun­ty (MD).  Before Decem­ber 2013, Vir­ginia pro­vid­ed job­less ben­e­fits for 40 weeks, Mary­land for 63 weeks. When Con­gress let extend­ed unem­ploy­ment ben­e­fits expire, the change was more extreme in Mary­land.  Look­ing at 1178 pairs of sim­i­lar­ly adja­cent coun­ties in neigh­bor­ing states with dif­fer­ent ben­e­fit dura­tions, they again found that employ­ment growth was much larg­er in high-ben­e­fit coun­ties than in their low-ben­e­fit neigh­bors, con­firm­ing their ear­li­er esti­mates that ben­e­fit cuts had increased employ­ment by 2 per­cent nationally.

Apply­ing more for­mal econo­met­ric analy­sis that accounts for oth­er vari­ables, the authors esti­mat­ed that the expi­ra­tion of extend­ed unem­ploy­ment ben­e­fits account­ed for 61 per­cent of the aggre­gate employ­ment growth that occurred dur­ing 2014.

“The con­sen­sus in the pro­fes­sion seemed to pre­dict a neg­a­tive impact of the cut in ben­e­fit dura­tions on the size of the labor force,” the authors wrote.  “Instead, we found that the reform led to almost a mil­lion non-par­tic­i­pants enter­ing the labor market.”

The impli­ca­tions, as the authors observed, are Coper­ni­can.  Pol­i­cy­mak­ers have in the past rou­tine­ly used ben­e­fit exten­sions “for the pur­pose of eco­nom­ic sta­bi­liza­tion.”  The thought was that by spend­ing more on unem­ploy­ment ben­e­fits, gov­ern­ment would stim­u­late con­sumer spend­ing and grow the econ­o­my, lead­ing to an increase in employment..

“Yet the find­ings in this paper imply that the neg­a­tive effects of unem­ploy­ment ben­e­fit exten­sions on employ­ment far out­weigh the poten­tial stim­u­la­tive effects often ascribed to this pol­i­cy,” they wrote.

The study chal­lenges a core pro­gres­sive dog­ma: that the more gov­ern­ment bor­rows and spends, the more it uses its coer­cive pow­ers to tax and reg­u­late, the more soci­etal ben­e­fit it produces.

It is more like­ly that the rela­tion­ship between gov­ern­ment inter­ven­tion and social ben­e­fit is non-lin­ear.  Some lev­el of tax­a­tion, spend­ing, reg­u­la­tion and debt is ben­e­fi­cial and nec­es­sary.  But such activ­i­ties can be car­ried to excess.  When they are, they do more harm than good, reduc­ing social ben­e­fits and in many cas­es harm­ing the very peo­ple gov­ern­ment aims to help.  Such appears to be the case with extend­ed unem­ploy­ment benefits.

By stand­ing firm against polit­i­cal pres­sures and the mis­guid­ed coun­sel of gov­ern­ment econ­o­mists, House Repub­li­cans helped pro­duce a ban­ner year for job growth.

Amer­i­ca is bet­ter off today because the Pres­i­dent didn’t let the demands of gov­er­nance inter­fere with his beach time.