Time running out on unemployment extension as Congress returns

With lawmakers set to return next week for a lame-duck session, uncertainty is looming over the continuation of emergency unemployment benefits as time is running out before the latest extension expires at the end of November.

Congressional Democratic leaders have yet to formulate a plan how to proceed with the expiring extension with the debate on the issue expected to take center stage when lawmakers return next week.

ADVERTISEMENT
If lawmakers don't act by Nov. 30, upwards of 2 million people could be without federal emergency benefits by the end of the year, according to figures from the National Employment Law Project (NELP).

"Congressional leadership, committee chairs and the White House are all acutely aware of the deadline," said Judy Conti, federal advocacy coordinator with NELP.

"Nov. 30 is fast approaching."

Lawmakers will have to balance that extension with the remaining hefty agenda that includes decisions on whether to extend the Bush-era tax cuts, patch the alternative minimum tax and pass a continuing resolution to keep the government running, at least into next year.

In the overall debate, the lame-duck battle could serve to magnify the starkness between the estimated $65 billion price tag to extend emergency benefits for one year -- up to 99 weeks of benefits that are provided after workers exhaust the 26 weeks offered by states -- and a $700 billion addition to the deficit to extend tax cuts for workers in higher tax brackets.

"The messaging will be intertwined; I don't see how it can't be," Conti said. "You're going to cut taxes for millionaires but you can't spend $65 billion for people who are on the edge. There's a beautiful symmetry to the issue."

The clash between Democrats and Republicans will likely set up another round of arguments over deficit spending on the unemployment benefits extension weighed against the tax extensions that the GOP is arguing will directly affect the nation's economic recovery.

While job creation was a key issue in last week's midterm elections, voters also expressed concern about the burgeoning deficit.

On Monday, the cause to extend benefits could get a boost from NELP, which is scheduled to release a poll that will probably show broad support from Americans for an extension while unemployment is high.

Benefits lapsed during the summer for nearly 3 million people who had been out of work for at least six months while Senate Republicans held up the measure over concerns that the $34 billion bill wasn't paid for and would add to the deficit.

A spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) said Friday that without an agenda or proposal on the table it was difficult to comment beyond the issue of deficit spending, which Republicans oppose.

In contrast, Senate Democrats have argued that extending the benefits have historically been considered emergency spending and shouldn't be offset with other budget cuts or tax increases.

"Extending these benefits is crucial for the retail and manufacturing sectors of our economy, our economy as a whole, and for the individuals and families who’ve lost jobs through no fault of their own, particularly during the holiday season," a Senate Finance Committee aide told The Hill. "Chairman (Max) Baucus will be actively looking for ways to extend these benefits."

An aide for Senate Majority Leader Harry Reid (D-Nev.) said Democrats need the cooperation of Republicans to move an extension.

"Policymakers have legitimate concerns about the nation’s unsustainable long-term budget deficit," said Chad Stone, chief economist at the Center on Budget and Policy Priorities (CBPP), and research assistant Hannah Shaw in a blog post this week.

During the past 60 years, the highest unemployment rate at which federal unemployment benefits have been cut off was 7.2 percent, according to the CBPP.

"Continuing federal emergency UI benefits until the job market is stronger will have a negligible impact on the long-term deficit," Stone and Shaw said in the post. "And allowing them to expire prematurely, or requiring Congress to offset the costs of any extension by cutting other current spending, will endanger a fragile economic recovery."

Some supporters off Capitol Hill are pressing for a yearlong extension through December 2011 because unemployment is expected to remain elevated through next year, Conti said.

"The economy demands an extension through 2011," Conti said.

A short-term extension of two to three months would jeopardize and probably end the chances for any future extensions of federal benefits, especially with Republicans taking control of the House in the 112th Congress.

Conti argued that unemployment benefits are "deeply stimulative" when they aren't offset, they're the "best economic stimulus we have by a long shot."

The extension could create or save 488,000 payroll jobs through 2011, while supporting 723,000 full-time equivalent jobs, according to a report by the Economic Policy Institute.

"Furthermore, though the estimated cost of continuing the extensions through 2011 is $65 billion, the actual cost, when accounting for the revenue from taxes paid on wages from UI-supported jobs and savings on social safety net services, is $25.9 billion."

Extending the benefits amid the holidays also could provide greater certainty to those who have struggled to find work and states that have had to stop and start the benefits several times while lawmakers work out extensions, she said.

If Congress passes a short-term extension it would leave workers hanging and unlikely to see any additional benefits when -- two or three or up to six months -- it will be much more difficult with Republicans in control of the House and the Democrats' majority in the Senate slimmed by six seats.

Unemployment figures have hovered around 450,000 for most of the year and hiring hasn't picked up pace to make a dent in the 9.6 percent unemployment rate.

The economy needs jobless claims to drop into the low 400,000s or high 300,000s — a decrease of 50,000 to 70,000 a month — to reflect stronger job growth in the private sector and propel the recovery.