Deadline looms for Congress to cut deal on unemployment benefits

The path to renewing the federal unemployment benefits program could be smoothed if lawmakers can agree on how and when to pay for it.

Advocates of reauthorizing the program say they are willing this time around to cover the $44 billion cost of a one-year extension, although they prefer that the offsets are pushed down the road at least three years.

"I'm not saying it's going to be easy," said Judy Conti, federal advocacy coordinator with the National Employment Law Project.

"We want to extend benefits and nobody is fighting this time for it not to be offset."

A report released Tuesday by NELP shows that nearly 2 million workers will lose their unemployment insurance in January if Congress fails to renew the programs, and millions face being cut off beyond that time.

Harsh words have been exchanged during previous battles over extending benefits with the main sticking point on whether or not to offset an extension of the program.

In this budget environment though, paying for the program becomes a political necessity.

The program is set to expire at year's end, so Republicans and Democrats will have to scramble to iron out the details — what offsets and when they go into effect.

In the past, Democrats have argued that cost shouldn't be covered because it negates the economic effects — in this case about $88 billion in spending, double the amount put into the program.

Whereas, Republicans have been insistent, especially as budgetary issues rose to the forefront, on paying for any extensions.

"This economy cannot afford to have $90 billion in economic activity lost," Conti said.

"Who in their right mind would let that happen it's insane to contemplate it."

At this point, House Minority Leader Nancy Pelosi (D-Calif.) supports President Obama's jobs bill, which includes a yearlong reauthorization of the UI program and is fully paid for, although those offsets are in dispute.

Still, in the meantime lawmakers have a lot of work to do in less than two months including passage of a budget plan that's in its earliest stages of construction by the deficit-reduction panel as well as determining a way forward on spending bills for the remainder of fiscal 2012 — the current stopgap spending measure expires Nov. 18.

The rapidly approaching holidays and the 2012 elections might also help speed a solution, especially amid the backdrop of the supercommittee's work, which could help determine a way forward on the benefits program.

"We're not close to figuring out how it's going to happen, it's like everything else," Conti said. "There are a lot of moving parts and there has to be something attractive for Republicans and attractive to Democrats."

Right now, most of the discussions are taking place behind the scenes but public talks within the halls of Congress should ramp up soon.

"It is on everybody's radar screen and it's true no one is talking about it," Conti said.

"Everyone is aware of the looming deadline and they know they have to take some action," she said.

The extension covers only those who have exhausted their 26 weeks of state jobless insurance or who are working their way through the federal tiers.

It doesn't extend benefits beyond 99 weeks.

The last bill was passed as part of the $858 billion tax-cut package in December.

“For millions of out-of-work Americans hanging on by a thread, unemployment insurance is the only thing preventing a free-fall into destitution and despair,” said Christine Owens, executive director of NELP. “For struggling businesses and the halting economy, unemployment insurance is what’s preserving consumer spending at a moment we need it most. Withdrawing this crucial stimulus would likely tip the nation back into recession.”

Workers in any state who exhaust their regular UI benefits before they can find a job can receive up to 34 additional weeks of benefits through the temporary federal Emergency Unemployment Compensation (EUC) program enacted in 2008. That number rises to 53 weeks in states with especially high unemployment rates.

Workers who exhaust their regular UI and EUC benefits can receive additional weeks of benefits through the permanent federal-state Extended Benefits (EB) program if their state’s unemployment insurance laws allow it.

The federal unemployment insurance programs have saved or created millions of jobs since first enacted in July 2008, including more than 1.1 million jobs in the fourth quarter of 2009 alone, according to the NELP report.

During the past three years, more than 17 million unemployed Americans have received federal unemployment insurance, pumping $180 billion back into local communities and economies hit hard by severe unemployment, the report said.

California, Florida, New York, Texas, and New Jersey top the list of states facing premature cut‐offs, according to the report’s state‐by‐state breakdowns.

The unemployment rate is currently at 9.1 percent, and for almost two years, nearly 45 percent of the unemployed—more than six million people—have been out of work for six months or longer.

“We are mired in a national crisis of long-term unemployment. Not since the Great Depression have so many people been out of work for so long. This is not the time to cut back on federal unemployment insurance,” said Owens.

The highest unemployment rate when federal benefits were cut by Congress was in 1985, at 7.2 percent.

“With our economy so fragile, long-term unemployment so high, and the job market so weak, the stakes could not be greater or the consequences of inaction more severe,” Owens said. “Congress must step up and pass the President’s proposal to reauthorize federal unemployment insurance programs through 2012, as part of the broader jobs bill initiative being debated in the Senate this week."