Republicans cool to Obama’s proposal to extend federal unemployment benefits

Republicans are cool to a White House proposal that federal unemployment benefits be extended for another year.

Extending the benefits would cost $30 billion and was included in the first deficit-reduction proposal that President Obama sent to GOP leaders this week.

With talks to avoid the “fiscal cliff” seemingly at a standstill, Republicans are suggesting that the cost of extending the jobless benefits program could prove problematic.

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"After spending $215 billion and adding $180 billion to the debt, more spending on federal unemployment benefits, above and beyond what the states already spend, would have to be carefully considered during fiscal cliff talks," said a House GOP aide.

A Senate Republican aide said they have not gotten into any specifics on what an extension might look like as lawmakers and the White House hash out some of the larger details of the debt package.

The fate of the unemployment benefits is not a major focus in the talks, but the outcome looms large for the more than 2.1 million people who stand to lose the federal aid if an extension isn’t passed.

Sen. Chuck Schumer (D-N.Y.) said that adding the extension to a larger package is gaining steam among Democrats as a way to stimulate the economy.

"It's one of the things high up on my list," he told The Hill.

Some opponents say the benefits — which provides support after state help runs out — discourage people from finding work and should be allowed to lapse.

There is already a push among Republicans to ensure that any unemployment package be fully paid for.

Senate Budget Committee ranking member Jeff Sessions (R-Ala.) wrote a letter recently to House and Senate leaders calling for offsets through reductions of spending to cover the cost of unemployment insurance.

"Offsets for any of these changes must also be achieved through real savings, not gimmicks like counting baseline savings from future War spending that is not expected to occur," Sessions said, referring to the “savings” from the end of the conflicts in Iraq and Afghanistan.

Another Senate GOP aide said that in trying to tackle the nation's debt crisis, "it’s fair to say that we would support ensuring that as much of future spending be fully paid for."

Advocates for the extended help oppose offsetting the cost. They argue the funding is more beneficial for the economy if it is financed through borrowing.

A report released this week by the nonpartisan Congressional Budget Office (CBO) found that extending the unemployment program through next year would create 300,000 jobs and boost economic growth by 0.2 percent in the fourth quarter of 2013.

CBO found that the program produces $1.10 in return for every dollar that the government spends, and estimated that benefits totaled $94 billion in fiscal 2012, when the unemployment rate averaged 8.3 percent.

Democrats on both sides of the Capitol are calling the extension a top priority in their quest to complete a fiscal package before the end of December.

"Given the potency and efficiency of unemployment insurance there should be no reason to let it lapse or expire," Democratic Sen. Jack Reed (R.I.) said in a letter to colleagues this week.

Reed is gathering signatures of support of a measure extending the longer jobless aid.

"Failure to continue unemployment insurance through 2013 would reduce economic growth by $48 billion and sap 400,000 jobs from the economy,” Reid said.

Rep. Chris Van Hollen (D-Md.) said the top priority "is job creation and accelerating the recovery, and a UI extension is part of that."

Democrats expressed confidence that Obama will push hard to ensure that the unemployment benefits are included in whatever deal he reaches with Republicans.

House Ways and Means ranking member Sander Levin (D-Mich.) said the Obama administration is an "absolute solid" on the extension.

"The administration is 100 percent … 110 percent in favor of extending UI," he said after meeting in the Capitol Thursday with Treasury Secretary Timothy Geithner.