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Schumer Promises Help for 99ers, But Skips the Details

August 2, 2010 - by Donny Shaw

The most shocking data point on the unemployment situation in the U.S. isn’t that we’ve been above 9% for almost a year and a half now. It’s that the median length of unemployment for individuals currently is 26 weeks, which is twice as long as it has ever been since the government began tracking this data in the ‘60s. Anyone who is unemployed for longer than 26 weeks is considered “long-term unemployed” by the government. Right now, that’s about half of all unemployed people, and it will likely be more than half in the very near future. Here’s a graph from the St. Louis Fed laying it out.

Over the past two years, Congress has repeatedly extended unemployment insurance benefits beyond the normal 26-week period. Currently, unemployed individuals in states with high unemployment rates (above 8.5%) can receive up to 99 weeks of benefits. But all of those extended benefits are set to expire on November 30, 2010 and after that it will be back to just 26 weeks of benefits in every state. Furthermore, economists estimate that at least 1 million people have already exhausted all 99 weeks of their benefits (so-called “99ers”). By the time the current benefits extension runs out in November, that number will probably be closer to 2 million, and approximately 1.5 million people each week will be added to the ranks of the exhausts.

Unless, of course, Congress acts.

In light of all this, watch Sen. Chuck Schumer [D, NY] last week on WENY-TV:

Schumer says that a bill to help 99ers is coming — at some point — and gives no further details. In some sense, this is a step forward for the 99ers. It shows that members of Congress are hearing them and that they are starting take on the cause at least for their political advantage. But we don’t have enough information at this point to know if this is anything more than that. Here are a few things to watch for when the bill is introduced.

1) What, exactly, will Schumer’s legislation look like? Will it be straight-up additional weeks of benefits for 99ers, some kind of reemployment account program, or a job-training benefits program? The latter two options would probably have more support among conservative Democrats and Republicans, but they will also provide somewhat less support to the 99ers.

2) Does it have the support of the leadership (i.e. Majority Leader Sen. Harry Reid [D, NV] and House Speaker Rep. Nancy Pelosi [D, CA-8])? If not, this is just a throw-away bill that Schumer plans to drop in the hopper and let die like 96% of all bills do. Of the 140 bills Schumer has sponsored this session, only 3 of them have become law. As we know, any member of Congress can introduce any bill they want, and they often introduce stuff they know has 0% chance of passing just to give themselves quick credentials on an issue. So far, Reid and Pelosi have been silent on help for the 99ers, so it’s possible that this is a lone-wolf effort on Schumer’s part and that it’s not really going to be a viable bill.

In the interview Schumer says “we” (i.e. “we’re gonna try to do that next”), so it’s possible that he’s referring to the Democratic caucus as a whole. But he could also be referring to himself and a few rank-and-file co-sponsors. We’ll be watching for statements of support from Reid and others when the bill is introduced. 

3) Will it be offset, and, if so, how? Over the past two years, support for extending unemployment benefits as “emergency spending,” which does not have to be offset under the Pay-Go law, has progressively weakened. In November 2009, the Senate voted 97-1 for such a bill. In March 2010, they voted 78-19 for another unpaid UI extension. And on July 20, 2010 they passed one with no votes to spare by a vote of 60-40. The trend is pretty obvious — as time progresses, there is less and less support for emergency unemployment insurance extensions. And in July the Democrats were stretched to their limit on their emergency UI bill. 

Many Republicans (plus Democrat Sen. Ben Nelson [NE]) say they would have voted for the July bill if its costs were offset with money taken from the Recovery Act. However, using stimulus money to fund another extension that includes help for the 99ers probably wouldn’t pass muster with most Democrats. They argue, rightly, that taking money out of the Recovery Act to pay for UI benefits neutralizes the stimulative effects of both. Sen. Scott Brown [R, MA] recently forced a vote on paying for the UI bill with Recovery Act money and it was opposed by all but two Democrats — Nelson and Sen. Blanche Lincoln [D, AR].

So, if Schumer wants to pass this bill, he will probably have to offset its costs with new revenues and do it some way other than taking money from the Recovery Act. Off the top of my head, possibilities include closing tax loopholes on hedge funds, eliminating offshore-oil-drilling subsidies, or some sort of a financial transactions tax. None of those things would be easy, but it seems almost impossible for Schumer and the Democrats to pass extra unemployment insurance benefits and help for the 99ers without winning on one of these big, untapped revenue sources.

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