Odds slim for extension of jobless benefits

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Posted: Tuesday, November 19, 2013 12:00 am

WASHINGTON — Unless Congress acts, during the last week of December an estimated 1.3 million people will lose access to an emergency program providing them with additional weeks of jobless benefits. An additional 850,000 will be denied benefits in the first quarter of 2014.

Congressional Democrats and the White House, pointing to the sluggish recovery and the still-high jobless rate, are pushing to again extend the period covered by the unemployment insurance program. But with Congress still far from a budget deal and still struggling to find alternatives to the $1 trillion in long-term cuts known as sequestration, lawmakers say the chances of an extension before Congress adjourns in two weeks are slim.

As a result, one of the largest stimulus measures passed during the recession is likely to come to an end, and jobless workers in many states are likely to receive considerably fewer weeks of benefits.

In all, as many as 4.8 million people could be affected by expiring unemployment benefits through 2014, estimated Gene Sperling, President Barack Obama’s top economic adviser.

“Historically, there has not been a time where the unemployment rate has been this high where you have not extended it,” Sperling said in an interview. “Why would you not extend now, when you’re dealing with the nearly unprecedented levels of long-term unemployment coming off such a historic recession? This would be the wrong time to do it.”

Democrats are pushing for an extension of the emergency insurance program as part of the broader budget talks designed to avert a repeat of the government shutdown in October. But negotiators in the House and Senate are discussing a relatively small deal focused on replacing or altering the sequestration cuts, which would probably not include an extension of the jobless program.

Both Republicans and Democrats are skeptical that even such a small deal is possible given how divided the parties are.

Sen. Patty Murray, D-Wash., chairwoman of the Budget Committee, “clearly supports the policy, is interested in doing it and is hopeful there will be a path in this budget conference,” said a senior Democratic aide with knowledge of the discussions. “She will continue to work with Republicans to see if it’s possible in this deal.”

Republican aides declined to discuss the talks. But Rep. Paul Ryan, R-Wis., the House budget chairman, “is committed to finding common ground,” said William Allison, a spokesman. “He hopes both parties can work together to cut spending in a smarter way.”

Congress initially created the federally funded unemployment insurance extension in 2008 as a way to combat poverty and to help unemployed workers get through the worst recession since the Great Depression. Congress has repeatedly extended the program since then, with the Congressional Budget Office calling it among the most effective forms of government stimulus.

But with each extension, legislators have haggled over the program’s cost and over how many weeks of benefits the government should provide. Extending the current program through 2014 would cost about $25 billion. The program has cost roughly $250 billion so far.

The end of the emergency program would come as the economy is improving, if slowly. Employers are now adding jobs at a pace of around 200,000 a month, and the unemployment rate has dropped to 7.3 percent.

But weakness persists beyond the headline numbers. About 4 million Americans have been looking for work for more than six months, and the share of the working-age population with a job has declined over the past year.

In part that is because the government has slashed spending even as private businesses have picked up their hiring. Sequestration forced federal agencies to enact sudden budget cuts this year. And a number of recession-era programs beyond the emergency jobless aid program are ending. This month, for example, an expansion of the food stamp program expired.

The left-of-center Economic Policy Institute has estimated that the expiration of the emergency jobless benefits program would reduce job growth by 310,000 positions next year because consumers overall would have less money to spend. Michael Feroli, chief U.S. economist at JPMorgan Chase, has estimated that it would drain about four-tenths of a percentage point from first-quarter economic growth.

Already, about 2.5 million unemployed people who have not worked in six months or more are receiving no federal jobless benefits.

Those include Jonathan Galliher, a 31-year-old computer programmer in Chicago who is living with family and freelancing while searching for a full-time job. “For a long time, I felt like I didn’t have any momentum,” he said. “It has been difficult. I spend my days sitting at home, working and not really seeing a lot of other people. That kind of isolation is not good for people.”

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