By Vicki Needham - 11/26/11 09:32 PM EST
Advocates are optimistic Congress will extend federal unemployment benefits before the end of the year despite the supercommittee's failure.
A supercommittee package had been seen as the most likely vehicle for the unemployment benefits scheduled to expire at the end of the year.
A package would have represented a compromise between Republicans seeking to cut spending and Democrats who wanted to provide some stimulus for the economy.
If a bill isn't cleared by Congress before Dec. 31, 2.1 million people could lose their benefits by mid-February, and 6.1 million would see their checks vanish by the end of next year, the National Employment Law Project has estimated.
Democrats, along with some economists, argue this could also hurt the economy by pulling money out of people's pockets.
"People understand with the economy the way it is we can't abandon long-term unemployed and families and we can't pull $90 billion out of the economy," said Judy Conti, federal advocacy coordinator with the group.
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.
Conti and other advocates for the unemployed say they are optimistic another vehicle will be found in part because of the rhetoric of Republicans, who have not criticized the program in recent weeks.
Another positive sign, Conti said, is that while talk about the issue has been subdued, discussions are escalating on reauthorizing the federal benefits.
Several other expiring provisions could be added to a package that would also include the unemployment benefits, including the Medicare "doc fix" that prevents a scheduled cut in physician payments, an extension of a payroll tax credit backed by President Obama and a series of other tax breaks known as the "extenders" that are scheduled to expire.
The tax extenders, which include a tax break for research and development by companies, are popular with the GOP, which could help the two sides reach a compromise.
Conti said she expects a flurry of activity when Congress returns next week and that the "powers that be will drop that package and figure out a path forward to make that happen."
House Democrats aren't wasting any time ramping up their push for a yearlong extension of jobless benefits.
House Minority Leader Nancy Pelosi (Calif.) Minority Whip Steny Hoyer (Md.), and Assistant Leader James Clyburn (S.C.) sent a letter this week to Speaker John Boehner (Ohio) calling on him to ensure passage of the benefits by the end of the year along with the payroll tax credit and the doc fix.
The trio also promised Democrats would not offer amendments that might slow the process.
“Independent economists from across the political spectrum estimate that failure to pass these essential pieces of legislation could reduce economic growth by as much as 2 percentage points next year,” they wrote.
Those supporting a reauthorization of unemployment benefits say not acting by Christmas could force consumers to curtail spending, employers to hold back hiring and have a broader effect on the slowly improving economy.
The toughest part of a deal will be finding an offset for the unemployment benefits. When they were last extended in December 2010, they were included in a larger package that also extended all of the Bush tax rates for two years. That legislation was not offset with other spending cuts.
The cost of extending the federal unemployment benefits for a year is $44 billion.
The nonpartisan Congressional Budget Office in a report last week said households receiving the benefits would be likely to spend them, which could spur economic activity.
“Households receiving unemployment benefits tend to spend the additional benefits quickly, making this option both timely and cost-effective in spurring economic activity and employment,” the report said.
The Economic Policy Institute, a left-leaning group, estimates that allowing the benefits to expire would hurt consumer demand and thereby cost the U.S. economy 528,000 jobs.
"The real failure of the Joint Select Committee is not the lack of a deficit-cutting agreement, which poses no threat to the economy, but rather the failure to reauthorize the federal unemployment insurance programs that expire on December 31," said Christine Owens, executive director of the NELP.
House-sponsored legislation also would relieve states that have federal unemployment insurance loans from interest charges next year, prevent higher federal unemployment taxes beginning in January on employers in insolvent states and provide a solvency bonus to states without any outstanding loans.
Sen. Jack Reed (D-R.I.) introduced a companion measure in the Senate on Thursday along with Sens. Dick Durbin (D-Ill.) and Sheldon Whitehouse (D-R.I.).