CHN: Will Congress Continue Jobless Benefits to Help the Unemployed, Their Families and the Economy?

Unless Congress acts when it returns from the Thanksgiving holiday, millions of hardworking Americans who have exhausted their 26 weeks of state benefits—including 2 million in December alone—will lose their federal unemployment insurance (UI) benefits. Currently there are five applicants for every job opening in our economy. If Congress allows UI benefits for the long-term unemployed to lapse on November 30, economists warn that the loss of income to millions during the holiday season and beyond is likely to put our economy further at risk.
Since the 1950s, emergency UI benefits have kept workers afloat and kept the economy moving until unemployment declined and job prospects began to improve. Over this half-century eight rounds of federal emergency benefits have been enacted, none allowed to expire while the unemployment rate remained as high as 7.2 percent. Today, more than a year after the recession has officially ended, unemployment remains at 9.6 percent and is expected to remain high well through the end of next year.

A House bill (H.R. 6419) to extend jobless benefits through February 2011 was rejected last week, driving home the fear that benefits will likely lapse on November 30. H.R. 6419 was defeated on November 18 by a 258-154 vote under rules which require a two-thirds majority.

UI benefits have already lapsed twice this year—in April and in June. When the program expired last June, more than two million unemployed Americans had their benefits cut off during the seven weeks it took Congress to extend the program. Although benefits were retroactively restored, struggling for almost two months without this lifeline put a huge strain on unemployed workers and their families, making it hard for them to afford necessities such as groceries, utilities and other basic goods.

With the continued fragile state of the economy, the cost of discontinuing UI benefits again would be high. According to a new report by the Center for American Progress, every dollar spent on benefits for the unemployed since the recession’s start has generated $2.00 in economic growth. The $60 billion dollar cost of continuing the UI program for one year is well worth the economic payoff, as economists point to these benefits as the most effective type of stimulus spending. Goldman Sachs estimates that economic growth would fall by half a percentage point if UI benefits were allowed to expire. In contrast, extending the Bush tax cuts for the top two percent of Americans would produce far less economic growth than continuing unemployment benefits, while also increasing the deficit by $700 billion over the next ten years.

It is estimated that continuing the existing UI program through next year will create the equivalent of more than 700,000 full-time jobs in 2011. Polls show that 60 percent of Americans favor continuing UI benefits for long-term unemployed workers who have exhausted their state benefits but still cannot find a job (see poll conducted by NELP and Half in Ten, page 11).

If Congress does not pass an extension of benefits, unemployed workers will lose about $2.5 billion dollars this December. The economy, and especially the retail sector, will suffer during the holiday season and thereafter if unemployed workers do not have money to spend.

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