Main Street

23 Days Since Congress Let Unemployment Benefits Lapse

An estimated 40,000 long-term jobless workers a day have had their federal unemployment insurance payments stop since Congress allowed the program to lapse over Memorial Day weekend. Of the 6.8 million Americans who have been out of work for six months or more, the number who have lost their benefits is now approaching 1 million.

Yet another version of the bill to extend these benefits may come up for votes in the Senate today or tomorrow. Every Republican Senator and Sen. Ben Nelson (D-NE) have thus far continuously blocked the bill.

Reuters is reporting that while Democrats have offered a series of changes and concessions in an effort to gain at least two Republican votes, the outcome is still in doubt:

In an effort to break a stalemate over a package of unemployment aid and business tax breaks, Senate Democrats on Wednesday offered a compromise that would pare proposed aid to cash-strapped states.

Democrats had hope the changes to the legislation, which also would increase taxes on investment fund managers, would attract some Republicans support, but Senate aides said that appears doubtful. Senate Majority Leader Harry Reid is pushing for a vote on the legislation by the end of the week.

In an effort to trim the cost, the new version pares down proposed Medicaid aid to states struggling to balance their budgets. States are pushing Congress to extend beyond the December expiration date the extra funds for the Medicaid healthcare program for the poor that were included in the stimulus plan passed last year. The program takes up an average 20 percent of state budgets.

Time is running out for lawmakers. Most states begin their fiscal year next week, and many banked on an extension of the Medicaid boost when drafting their budgets.

The extra Medicaid funding would decline to 3.2 percent in the first three months of 2011 and to 1.2 percent through June. A draft floated on Tuesday had a phase-down to 5.3 percent and then 3.2 percent.

Senate Democratic leaders are trying to get support from a recalcitrant group of Republicans including Maine’s two Republican Senators, Susan Collins and Olympia Snowe, who appear to be getting a lot of calls from constituents, as well as Sen. George Voinovich (R-OH) and Sen. Scott Brown (R-MA). Sixty votes are needed to overcome the Republican-led filibuster.

Every day it becomes more and more clear that the Republican refusal to allow a vote to restore the extended unemployment insurance programs has little to do with their oft-repeated but disingenuous “deficit” concerns.

From today’s editorial in the Washington Post:

THE LONG-TERM unemployment rate is at a record level. So is the federal deficit. Both of these are serious concerns. But it is possible — in theory, anyway — for Congress to be both compassionate and prudent. In the short term, lawmakers should resolve the logjam that has allowed federal benefits to lapse for more than 900,000 unemployed.

More than 40 percent of the unemployed have been without work for six months. More alarming, nearly one-fourth have been jobless for a year or longer, according to calculations by the Pew Fiscal Analysis Initiative. Generally, states pay for the first 26 weeks of unemployment benefits; in periods of high unemployment, the federal government steps in to cover additional weeks. During the current recession, benefits can last up to 99 weeks.

On June 1, that emergency federal program expired, and the Senate has been unable to muster the 60 votes needed to reinstate it, as part of a package that would also include extending some expiring tax cuts and providing extra Medicaid money to cash-strapped states. Without congressional action, more than 2 million of the unemployed will have lost benefits by July 10, some after just 26 weeks.

Part of what’s holding up Senate action is a dispute over whether lawmakers have gone too far — too far! — in closing tax loopholes for the wealthy to help pay for the package. One involves “carried interest,” the mechanism that investment bankers and venture capitalists use to pay lower tax rates on their income from doing deals. Doing away with this tax dodge would have raised $24 billion over 10 years; that has now been whittled down to $13 billion. The same is happening with an effort to close the so-called John Edwards loophole, under which small partnerships such as law firms avoid paying Medicare payroll taxes by casting their income as profits rather than salary. Sen. Olympia Snowe (R-Maine), a key potential vote, has called this provision “a poison pill.”

Amazingly, while senators work to keep these loopholes open, they are trying to trim the final cost of the package by cutting close to $8 billion in future food stamp benefits. What kind of priorities does this choice reflect?

This morning the AP reports that the continued weakness in the labor market is now even more of a concern in light of a drop in durable goods orders:

The Labor Department said initial claims for unemployment benefits fell to a seasonally adjusted 457,000 last week. That’s slightly better than the 460,000 forecast by economists polled by Thomson Reuters.

However, initial jobless claims are still above levels that would signal employers are ramping up hiring. Claims have remained high in recent months, calling into question whether a strong, sustained recovery can occur without significant job growth.

A second report showed orders for durable goods fell last month for the first time in six months. Orders for big-ticket goods fell 1.1 percent in May, slightly better than the 1.3 percent drop predicted.

Five of six recent national polls show that Americans are far more concerned about jobs and the economic recovery than they are about the budget deficit. FiveThirtyEight reports (via Ben Somberg):

A Pew Research / National Journal poll from early June asked “Which of the following national economic issues worries you most?” Number one was “job situation” with 41%. “Federal budget deficit” got 23%.

An NBC / Wall Street Journal poll from early May asked “Please tell me which one of these items you think should be the top priority for the federal government.” Sure enough, “job creation and economic growth” won with 35%. “The deficit and government spending” got 20%.

A Fox News poll also in early May got even more dramatic results. “Economy and jobs” topped the priority list with 47%, while “deficit, spending” garnered only 15%.

A CBS / NYT poll in early April found 27% prioritizing “jobs”, 27% the “economy” and 5% prioritizing “budget deficit/national debt.”

In the USA Today / Gallup poll from late May . . . participants were asked “How serious a threat to the future well-being of the United States do you consider each of the following.” For “federal government debt”, 40% said extremely serious, 39% very serious, and 15% somewhat serious. For “unemployment”, 33% said extremely serious, 50% said very serious, and 15% said somewhat serious.

a newer Gallup poll, from a week ago, asking “What do you think is the most important problem facing the country today?” finds the economy and jobs on top. “Economy in general” gets 28%, “Unemployment/Jobs” gets 21%, and “Federal budget deficit” gets 7%.

Twenty-three days and counting. When will the Senate get its wake-up call? Call toll-free 888-254-5087.

Tags: filibuster, HR 4213, Jobs, unemployment