Congress moves to extend unemployment benefits

The Senate and House are both moving to extend costly unemployment insurance benefits included in the $787 billion economic stimulus package amid fears about a jobless recovery and growing fiscal deficits.

The nation's unemployment rate stands at 9.4 percent and actually dipped one-tenth of a point in July, but is widely expected to increase in coming months. Unemployment hasn't been this high in a quarter-century, and a record number of workers have been unemployed for an extended period of more than 27 weeks.

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Rhode Island Sen. Jack Reed (D), whose state has a 12.4 percent unemployment rate that trails only Michigan, introduced legislation Friday to extend enhanced unemployment benefits through the end of 2010. The benefits were first included in the stimulus bill and are set to expire at the end of the year.

The stimulus extended the time unemployed workers are eligible for benefits and offered a $25-per-week increase in payments. Reed's bill would provide an additional 13 weeks of coverage for job-seekers in states with unemployment rates of 8.5 percent or higher.

Similar legislation had already been introduced in the House.

While a cost estimate for Reed's legislation is not yet available, the Congressional Budget Office (CBO) pegged unemployment insurance programs in the stimulus as costing about $39 billion over 10 years, with the bulk of spending coming in the first two years. Provisions currently in place increase the deficit at a rate of almost $850 million a week during 2009. Reed's legislation could be expected to meet or exceed these costs, as more unemployed workers take advantage of extended coverage for greater lengths of time.

Though there are some signs the recession is ending, unemployment is widely expected to continue to rise. It took more than a year for the jobless rate to go down after recessions in the 1990s and earlier this decade, as business is generally slow to pick up workers amid a recovery. The economy also must create 127,000 jobs per month just to keep up with the growing need for work.

While members of both parties across the country will face pressure to extend unemployment benefits given the number of people out of work, there could be resistance because of the price tag, particularly from Republicans who believe Democrats and President Barack Obama could be wounded by fears about government spending and rising deficits.

CBO last week estimated the federal deficit stands at $1.3 trillion, an all-time high.

A spokeswoman for Sen. John Ensign (R-Nev.) said the Finance Committee member hasn't made a decision on the bill. While Ensign supports providing benefits to unemployed workers, she said he's also worried about the cost. Finance would have jurisdiction over the bill.

"While he is still reviewing the bill, Sen. Ensign supports making sure unemployed Americans continue to receive their benefits in these tough economic times," spokeswoman Rebecca Fisher said in an e-mail.

She also suggested other funds from the stimulus could be used to further extend the unemployment benefits.

"However, we also have a duty to future generations to spend responsibly and he believes we should pay for future [unemployment insurance] extensions with the stimulus, which we have only spent 25 percent of," Fisher said.

The escalating battle over healthcare reform, which hinges in part on fears about the legislation's budget implications, could complicate efforts to move the unemployment bill.

Sen. Susan Collins (Maine), one of only three Senate Republicans to vote for the stimulus, thinks unemployment benefits should be extended until there's a real recovery in the economy.

"Sen. Collins believes that we need to extend unemployment benefits until the economy is recovering," Kevin Kelley, her communications director, said in an e-mail.

"She believes that [it] is unfortunate that Democratic leaders in both the House and Senate did not do so before August recess, but she believes they should act as soon as session resumes."

Rep. Jim McDermott (D-Wash.) introduced similar legislation in the House in late July. GOP Reps. Steven LaTourette (Ohio) and Candice Miller (Mich.) joined 21 House Democrats as co-sponsors. The unemployment rate in Ohio tops 11 percent.