Will the Unemployed Be Left Behind?September 8, 2011 - by Donny Shaw
For the past few years on OpenCongress, the hottest issue by far has been unemployment, specifically, keeping extended unemployment insurance benefits from lapsing while the jobless rate remains high. The current extended unemployment benefits program, which lasts up to 99 weeks in states with unemployment rates above 8.5%, has been reauthorized five times and its current authorization is scheduled to expire at the end of December. President Obama is expected to propose another reauthorization in his big jobs speech tonight, but it’s not clear that Congress is going to be willing to extend them once again.
Even when the Democrats controlled the House of Representatives and had a near supermajority in the Senate, the Democrats struggled to pass the extensions over Republican opposition. Every time the issue came up, Senate Republicans mounted a filibuster and dragged the debate out for weeks, if not months. Now, with Republicans in control of the House and with the Democrats 9 members short of the votes needed to break a filibusters in the Senate (10 when you consider that Sen. Ben Nelson [D, NE] will probably vote against an extension), Obama and Democrats who support the extension are basically powerless to get it done.
Letting the extended unemployment benefits expire in January would have a huge effect on the unemployed and the economy in general. For the past year, consistently more than 42% of unemployed workers were out of work for more than 26 weeks, which is the point at which regular state unemployment benefits end and the federal extensions kick in. With the unemployment rate expected to stay about where it is for the next couple years, letting the extended federal benefits expire would mean that nearly half of all people who lose their jobs, or approximately 6.2 million at any given time, would be left without any income before they find a new job. The effects of that would ripple thorugh the whole economy. More mortgages could go into default leading to an increase in foreclosures and further push down home prices. More people would be forced to turn to other government services at the same time they are being cut back through austerity budgets. Health care costs would increase as more uninsured use emergency room visits as their source of primary care. And, perhaps most significantly, the people most likely to spend any money they have and stimulate the economy would have no money to spend.
Those are just some of the economic effects. When you consider the sociological and psychological effects of millions of people unemployed with no life line of support, the problem gets much darker.
The best chance for another extension would probably be in a package together with proposals supported by the Republicans. That could include something like extending the full Bush tax cuts again or creating new hurdles for regulators promulgating rules. But would Democrats in the Senate go for something like that? Most Democrats, including Obama, have said they will not extend the Bush tax cuts again, and Senate Democrats have already pulled two jobs bills from the floor this year because Republicans attempted to attach their regulatory reform legislation to them. Plus, the new chief economist at the White House, Alan Krueger, has done some influential research on the effects of unemployment benefits on the unemployment rate that show mixed results at best, so the White House may not be pushing very hard for an extension this time.
Some related links on OC:
- H.R.589 — Emergency Unemployment Compensation Expansion Act
- OC Wiki — Uemployment Extensions Senate Scorecard 2009-2010
- OC Blog — past coverage of unemployment insurance
- OC Groups — Justice for the Unemployed