This article first appeared in the St. Louis Beacon, Nov. 29, 2010 - WASHINGTON - Unless Congress takes action, tens of thousands of jobless people in Missouri and Illinois will soon face the loss of their extended unemployment benefits -- just as the holiday season approaches.
While most congressional leaders agree that benefits should be extended because of continued high unemployment, legislative action has been delayed by disputes over how to pay for a proposed three-month extension -- possibly with as yet unspent money from the economic stimulus plan -- and whether it should be tied to the likely renewal of all or part of the Bush-era tax cuts.
"By Christmas, 2 million Americans will lose their unemployment benefits because they expire," if Congress does not act, said U.S. Sen. Dick Durbin, D-Ill., the deputy Senate majority leader. In an appearance Sunday on "Meet the Press," Durbin said 127,000 of those likely to lose benefits relatively soon are in Illinois.
In Missouri, U.S. Rep. William Lacy Clay, D-St. Louis, said, "It is morally indefensible and economically foolish to allow these emergency unemployment benefits to expire." In a statement supporting action by Congress to extend the federal benefits, he said, "Never in our history has Congress allowed emergency unemployment benefits to expire when unemployment is still so high."
Amy Susan, communications director of the Missouri Department of Labor and Industrial Relations in Jefferson City, told the Beacon on Monday that "we estimate 43,000 individuals will exhaust" their benefits between now and Jan. 1 in Missouri if there is no extension by Congress. It is difficult to set an exact number of jobless Missourians who stand to lose their unemployment benefits, mainly because the benefits expire gradually under a tiered system that, in some cases, will last until April.
(For a detailed explanation of the tiers and the scheduled phase-outs of Missouri unemployment benefits, check out the Department of Labor website or the Illinois Department of Employment Security for Illinois.)
Deadline approaches
If Congress does not act by Tuesday night, two major unemployment programs -- the emergency unemployment compensation (EUC) and the extended benefits (EB) programs, which provide weeks of federally funded jobless aid after basic state unemployment aid expires -- are set to expire. According to the National Employment Law Project, about 800,000 jobless people on extended benefits will be dropped almost immediately after the program expires, and another 1.2 million Americans will become ineligible for the next tier of emergency unemployment compensation during December.
Those two federal programs have lapsed before. Over the summer, nearly 2.5 million jobless Americans had their unemployment benefits interrupted when Congress took nearly two months to reauthorize the two programs. Eventually the federal benefits were restored.
Durbin said he hoped that extending unemployment insurance would be among the topics discussed at a highly anticipated White House meeting Tuesday, hosted by President Barack Obama, that will bring together congressional Republican and Democratic leaders. On Monday, Obama announced a pay freeze for most federal workers as part of what is expected to be a coordinated program of federal spending cutbacks.
While congressional action seems unlikely before Tuesday, some experts believe that Democrats will attach the three-month jobless extension to legislation to re-authorize all or part of the Bush-era tax cuts.
Last week, a coalition of 28 Senate Democrats, led by U.S. Sen. Bob Casey, D-Pa., signed a letter urging Congress to act quickly. "For the past six decades, Congress has provided federally funded unemployment insurance benefits during every recession," the letter said. "Further, federal unemployment insurance benefits have always been provided until the economy was on a stable path of growth."
In a test vote before Congress recessed for Thanksgiving, a nearly united front of House Republicans blocked a bill to extend the unemployment programs until February. Even though 59 percent of House members supported the measure, Democrats could not get the two-thirds majority needed to suspend the rules and move to a final vote. Clay and the other House Democrats from Missouri and southern Illinois voted for the measure; Rep. Todd Akin, R-Town and Country, and other Republicans from the region voted no.
Leading Republicans contended that the $12 billion cost of a three-month extension should be paid for with spending cuts elsewhere or by using unspent stimulus funds. Even so, U.S. Sen. John Kyl, R-Ariz., the deputy minority leader in the Senate, said Sunday that extending jobless benefits was among the actions that "need to be done" during the lame-duck session of Congress that adjourns in mid-December.
The national unemployment rate is about 9.6 percent, with 15 million Americans now unemployed. However, Clay points out, the minority unemployment rate is far worse, in some areas twice as high as the national average. In the past 60 years, the highest unemployment rate at which federal jobless benefits have been cut off is 7.2 percent, according to the Center for Budget and Policy Priorities.
The benefits of benefits
The cost of extending the federal unemployment programs through the entire year of 2011 has been estimated to be about $65 billion. However, that figure is closer to $26 billion if one takes into account the revenue from taxes paid on wages from unemployment-supported jobs, as well as estimated savings on social services.
Also, a recent U.S. Labor Department study found that a dollar spent on unemployment insurance led to a $2 increase in economic activity. The other main findings of the study:
- During each quarter of the recent recession, unemployment insurance (UI) benefits kept an average of 1.6 million Americans on the job.
- At the height of the recession, unemployment benefits averted 1.8 million job losses and kept the unemployment rate approximately 1.2 percentage points lower.
- UI benefits reduced the fall in GDP by 18 percent. Nominal gross domestic product (GDP) was $175 billion higher in 2009 than it would have been without benefits. In total, unemployment insurance kept GDP $315 billion higher from the start of the recession through the second quarter of 2010.
Citing the study, Secretary of Labor Hilda L. Solis said in a statement that unemployment insurance not only benefits the people who use them, but also for "millions more whose jobs are kept secure because of the stabilizing effect it has on our economy as a whole."
Clay said he hopes for congressional action soon. "As the economy begins to recover, the most irresponsible thing we could do is to abandon millions of hard-working Americans who depend on these benefits to save their homes, feed their families and keep the heat on, while they search for a new job," said Clay. "It is my hope that my colleagues, on both sides of the aisle, will search their consciences and do the right thing without delay."