House Republican leaders are angling to end emergency unemployment benefits when they expire on Dec. 28 for some 1.3 million Americans, sparking a confrontation with White House and Democrats who are pushing hard to extend them.
Reflecting the sentiments of his members, Speaker John Boehner suggested Friday that the “positive” November jobs report is a sign that the emergency benefits should lapse. (The economy added 203,000 jobs and the unemployment rate fell to a five-year low of 7 percent.)
“Today’s report includes positive signs that should discourage calls for more emergency government ‘stimulus,'” the Ohio Republican said in a statement. “Instead, what our economy needs is more pro-growth solutions that get government out of the way.”
House Majority Leader Eric Cantor (R-VA) on Thursday stressed that the Emergency Unemployment Compensation (EUC) program was approved in 2008 “as emergency spending, as emergency need” when the economy was in free fall. He said the solution was to get more unemployed Americans back to work.
Democrats chafed. “As our economy continues to gather steam, now is not the time for Washington to put on the breaks,” said Senate Majority Leader Harry Reid (D-NV).
The White House released a report Thursday detailing the number of people in each state that would lose access to benefits if they lapsed. Senior White House economists said the EUC program has “provided crucial support to the economy and to millions of Americans who lost jobs through no fault of their own.”
Economists have found unemployment compensation to be a highly effective form of stimulus in a weak economy. The nonpartisan Congressional Budget Office said extending the benefits for one year would cost $26 billion, boost GDP and increase employment.
“Recipients of the additional benefits would increase their spending on consumer goods and services,” the CBO report said this week. “That increase in aggregate demand would encourage businesses to boost production and hire more workers than they otherwise would, particularly given the expected slack in the capital and labor markets.”
The emergency unemployment compensation program allows unemployed workers to receive benefits for up to 99 weeks. Studies have found that people who are out of work for long periods of time tend to have great difficulty finding a new job. JP Morgan’s chief economist Michael Feroli projects that if the program lapses, many of the 1.3 million unemployed workers who lose their benefits will stop looking for work.
At his weekly press conference Thursday, Boehner didn’t completely rule out continuing unemployment benefits, saying that if President Barack Obama were to offer a plan to extend them he’d “surely entertain taking a look at it.” But he said Obama’s “real focus” ought to be improving the economic environment and “not more government programs.”
Democrats want to extend unemployment benefits in the budget deal being negotiated by Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA), but sources say that’s probably not going to happen. The matter will likely have to be dealt with separately.