Benefits Ending for One Million Unemployed

Continuing to define the Moral Bankruptcy of a Nation:

Greg Palast

Rand Paul, on his government-paid vacation, lifted his snout from the public trough to block unemployment insurance payment extension.

Benefits Ending for One Million Unemployed

Ken Cedeno for The New York Times

David Davis, an information technology expert and web designer, said the federal payments helped keep him afloat while he interviewed for new positions.

By ANNIE LOWREY

Published: December 27, 2013

WASHINGTON — An emergency federal program that acts as a lifeline for 1.3 million jobless workers will end on Saturday, drastically curtailing government support for the long-term unemployed and setting the stage for a major political fight in the new year.

Multimedia

Graphic

Cutting Back Unemployment Benefits

 

The program, in place since the recession started in 2008, provides up to 47 weeks of supplemental unemployment insurance payments to jobless people looking for work. Its expiration is expected to have far-reaching ramifications for the economy, cutting job growth by about 300,000 positions next year and pushing hundreds of thousands of households below the poverty line.

      

An extension of the unemployment program did not make it into the two-year budget deal that was passed just before Congress left on its winter recess. When the federal program expires, just one in four unemployed Americans will receive jobless benefits — the smallest proportion in half a century.

       

“I really depend on unemployment,” said David Davis of Chantilly, Va., adding that the $1,600 a month he receives is helping keep him afloat while he interviews for new positions. “I’ve got a résumé that knocks your socks off. The reason for this long period of unemployment is that the work just isn’t there.”

      

At one point, Mr. Davis, 68, made more than $100,000 a year as an information technology expert and web designer. He is now living on ramen noodles and $140 he counted out from his change jar.

 

Since being laid off over the summer, he has missed mortgage payments, forcing him to take out a reverse mortgage on his home. He sold his car and got a late-1990s model Ford Taurus, and is looking to cut his utility and cellphone bills. Soon, he might start taking Social Security.

 

“It’s very stressful,” Mr. Davis said. “At least I’ve had the ability to maneuver my finances so I don’t wind up homeless. That’s one goal, to avoid living on the street or in my car.”

 

Democrats on Capitol Hill are pushing for an extension of the program, though the constrained fiscal environment makes its reinstatement somewhat less likely, aides said. Members of the Republican leadership have indicated that they might be willing to extend the benefits, but only if Democrats offset the new spending with other cuts.

 

On Friday morning, President Obama called Senator Jack Reed, Democrat of Rhode Island, and Senator Dean Heller, Republican of Nevada, to extend his support for their proposal to extend emergency unemployment benefits for three months.

 

“The president said his administration would, as it has for several weeks now, push Congress to act promptly and in bipartisan fashion to address this urgent economic priority,” said Josh Earnest, a White House spokesman.

 

As the last payments are distributed, Democrats have initiated a campaign aimed at shaming Republicans — particularly those in leadership and in swing districts — for letting the program expire over the holiday season.

 

“I don’t know if our colleagues who have opposed passing the unemployment-insurance legislation know or care about the impact on families,” said Nancy Pelosi of California, the House minority leader. “The impact is very, very strong. It hurts the dignity of a family, of a worker.”

 

Americans United for Change, a liberal group, is running an advertisement on cable television stations. “You know who had a Merry Christmas? The richest 1 percent, that’s who. Republicans in Congress made sure of that, protecting billions in taxpayer giveaways,” it says. “For those facing tough times? Republicans stripped 1.3 million Americans of jobless benefits — folks who want to work, but cannot find a job — kicking them to the curb during Christmas.”

 

Republican aides said they remained willing to negotiate. “Why didn’t they offer a plan that met the speaker’s requirements — fiscally responsible, with something to create jobs — or any plan, for that matter, before they left for the holidays?” asked Michael Steel, a spokesman for John A. Boehner of Ohio, the speaker of the House.

 

Some Democrats have suggested that continuing the program for three months, with the estimated $6 billion in spending offsets coming from agricultural subsidies in the farm bill.

 

But some conservatives have shown stauncher opposition.

 

“I do support unemployment benefits for the 26 weeks that they’re paid for,” said Senator Rand Paul of Kentucky on Fox News. “If you extend it beyond that, you do a disservice to these workers. When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy.”

 

 

The loss of benefits is expected to drain billions in consumer spending from the economy next year.

 

People losing their federal benefits — often benefits they expected to continue to receive for weeks or months into 2014 — described cutting back on Christmas, driving less, turning off the heat, draining retirement accounts, applying for food stamps, readying to move in with relatives and missing mortgage payments.

 

The psychological toll is significant, too.

 

“I get up. I check my messages. I go through my ritual,” said Margie Bogash, 52, a laid-off medical laboratory manager in Pennsylvania, describing her job application process. “When I’m done cleaning up around my house, I sit down, I go on again. When I can’t sleep, I go on again. The past year has been very stressful — it’s still just very stressful.”

 

Ms. Bogash said the loss of benefits has spurred her husband to collect his Social Security payment early, meaning smaller benefit checks in perpetuity.

 

Extending the program for a year would cost an estimated $25 billion. But because recipients tend to immediately spend the money they receive in unemployment benefits, the effect on the economy will be amplified, economists said. The left-of-center Economic Policy Institute has said that the end of the program will cut job growth in 2014 by about 310,000 positions. Michael Feroli, the chief United States economist at JPMorgan Chase, has estimated that the loss of income will cut the country’s annual growth rate by about 0.4 percentage points in the first quarter of 2014.

 

“We are certainly seeing long-term unemployment as this deeply entrenched problem at a time when the economy seems to be growing,” said Christine L. Owens of the National Employment Law Project, a research and advocacy group. “This crisis of long-term unemployment has been unprecedented and remains unprecedented. It underscores that we need to maintain and frankly strengthen the kind of supports that long-term unemployed workers need to get jobs.”

 

Economists expect that the end of the emergency jobless benefits will, surprisingly, lead to a sharp drop in the unemployment rate, by as much as 0.5 percentage points.

 

That is in part because the loss of benefits might spur some workers to intensify their job search, or accept an offer they might have turned down.

 

Since her federal benefits expired, Jamie Young, a library scientist living in Portland, Ore., has accepted a part-time job, taking a large reduction in her income. “It’s embarrassing for me,” she said.

 

“I dread going to parties or social functions and having people ask me what I do.” Her unemployment has also spurred her to donate her eggs for $6,000 in compensation.

 

But the unemployment rate will primarily drop as workers, especially older workers, drop out of the labor force. Those receiving unemployment benefits are required to demonstrate that they are actively looking and applying for jobs. Without those benefits, and requirements, economists said, many might give up.

 

Analysts also believe the end of the federal program will lead to an increase in poverty. Already, cuts to unemployment insurance payments and reductions in the weeks of benefits have meant that the program has lifted fewer people out of poverty: 1.7 million Americans in 2012, down from 2.3 million in 2011 and 3.2 million in 2010.

 

“The opportunities that were there for my brother and my parents, they don’t seem to be there,” said Brett Ivey, a 29-year-old college graduate in Seattle, who lives on his $329-a-week unemployment insurance payment and about $15 a week in food stamps. “There’s hundreds of people fighting for the same job, just trying to get by.”

 

http://www.nytimes.com/2013/12/28/us/benefits-ending-for-one-million-of-unemployed.html?pagewanted=2&_r=0

 

Unemployment Benefits Are Ending for 1.3 Million Americans. What's That All About?

—By Erika Eichelberger

 

Luna Vandoorne/Shutterstock

On December 28, 1.3 million people will lose their unemployment insurance. That's because Congress failed to add an extension of those benefits into the budget deal that will likely pass the Senate this week. Here is some background:

Who is losing unemployment benefits? The long-term unemployed. After state unemployment benefits run out—usually after 26 weeks—federal emergency unemployment benefits kick in for up to another 47 weeks. Since Congress didn't renew the program, 1.3 million Americans will be kicked off benefits, which average $1,166 per month. By the end of 2014, another 3.6 million will lose their benefits.

Why are they called emergency benefits? In 2008, under President George W. Bush, Congress authorized emergency unemployment compensation to help the jobless cope with the recession, giving workers a total of 59 weeks of unemployment compensation. A year later, President Barack Obama signed a law giving the unemployed 14 more weeks of jobless benefits. At the height of the recession, Americans could get up to 99 weeks of unemployment pay. That number has since dipped to a maximum of 73 weeks. This is the first time since 2008 that Congress hasn't extended the program.

Under another federal program initiated by President Richard Nixon, Americans can still get an extra 13 weeks of benefits if the unemployment rate in their state is high enough. (This threshold varies by state).

The recovery is picking up pace. Is it time to end the program? Many Republicans think so. Sen. Rand Paul (R-Ky.) said last week that he thinks extending the benefits fosters unemployment. "I do support unemployment benefits for the 26 weeks that they're paid for. If you extend it beyond that, you do a disservice to these workers," Paul told Fox News. "When you allow people to be on unemployment insurance for 99 weeks [sic], you're causing them to become part of this perpetual unemployed group in our economy."

The long-term unemployment rate—the percentage of those without a job for 27 weeks or longer—remains at record levels, though, in an economy with three job applicants for every job opening. The overall jobless rate has dropped to its lowest in five years, but the long-term unemployment rate is at 37 percent of the total unemployed.

In past recessions, extended unemployment benefits ended when the long-term unemployed represented about 1.3 percent of the workforce. Today, the long-term jobless represent more than 2 percent of the labor force.

What will happen to Americans who lose their benefits? Even though the average monthly unemployment payment isn't nearly enough to support a family of four, the benefits do help people scrape by. When extended unemployment insurance expires, many Americans will fall deeper into poverty. In 2012, jobless benefits helped keep 1.7 million people—including 446,000 children—out of poverty, according to the National Employment Law Project.

Expiring benefits may also result in fewer Americans looking for jobs. Jobless insurance allows people to continue an active job search because it helps them afford presentable clothing and transportation to interviews. And Americans may be less motivated to look for work if they lose their benefits. Matt Yglesias at Slate explains:

[S]ome fairly substantial fraction of the long-term unemployed will just stop looking for a job and drop out of the labor force. If you're long-term unemployed, then almost by definition looking for work has not been very successful at getting you work. What it has gotten you is a UI [unemployment insurance] check. Take away the check, there's no point in bothering.

So why wasn't unemployment insurance included in the budget deal? Republicans say there's no urgent need to extend the $26 billion federal emergency unemployment insurance program because the economy is getting healthier. Democrats, who counter that the long-term unemployed are still struggling, wanted a budget deal more than they wanted the benefits extension.

Could the expiring benefits stall the recovery? Unemployment benefits act as a short-term economic stimulus, because unemployed people spend their benefits checks immediately. If the benefits were to continue, the economy would gain 200,000 jobs, and the GDP would grow by 0.2 percent in 2014, according to the Congressional Budget Office.

Is there any way out of this mess? When Congress reconvenes in early January, Senate Majority Leader Harry Reid (D-Nev.) will push a retroactive extension of the benefits. Rep. Chris Van Hollen (D-Md.) is urging Democrats to withhold support for the farm bill unless it addresses unemployment insurance.

"The people that are unemployed for a long period of time are Democrats and they are Republicans," Reid said last week. "This is an issue that Republicans, I think, need more than we need it. This is something I think will be extremely difficult for them to turn away from."

But because the spending on unemployment benefits will not be accompanied by a spending reduction, many Republicans are likely to vote against it.

http://www.motherjones.com/mojo/2013/12/unemployment-benefits-expiring-budget-deal

Bernie Sanders

Today's news from Sen. Bernie Sanders (I-Vt.):

Jobless Benefits Run Out: Unemployment benefits expired today for 1.3 million Americans out of work for longer than 26 weeks. Unless Congress acts when it reconvenes in January, the same fate awaits an additional 1.9 million people during the first half of 2014. Sen. Bernie Sanders said cutting benefits not only hurts the unemployed, it hurts the overall economy, according to MSNBC, the Burlington Free Press, Times Argus, Rutla...nd Herald, Bennington Banner, The Progressive and The Washington Times.

NSA Spying on Americans: A federal judge on Friday ruled that a National Security Agency program that collects enormous troves of phone records is legal. Earlier this month another federal judge and a presidential panel reached the opposite conclusion. Sens. Sanders and Patrick Leahy continue to believe the NSA is making mistakes, WPTZ-TV reported. “I think that the idea that the NSA is keeping files on every phone call made in the United States of America, intercepting emails, going into the websites is way, way, way over the top,” Sanders said in a report broadcast Friday and Saturday.

Continue reading here: http://www.sanders.senate.gov/newsroom/newswatch/122813See More