The Obama administration, bolstering a sustained push by Democrats to extend emergency unemployment benefits, warned today that a lapse may cost the U.S. as many as 240,000 jobs in 2014.
An estimated 1.3 million workers would immediately lose benefits if the emergency program, extended repeatedly since its inception in 2008, is allowed to expire on Dec. 28, according to the report drafted by President Barack Obama’s Council on Economic Advisers and the Labor Department. During 2014, 3.6 million more would have their benefits cut off.
“In no prior case has Congress allowed special extended benefits to expire when the unemployment rate was as high as it is today,” the report said, citing the current unemployment rate of 7.3 percent.
Obama has urged lawmakers to pass an extension of the benefits before they recess for the holidays, something House Republicans have said they are wary of doing more than four years after the U.S. emerged from the worst recession in the post-World War II era.
The program at one point provided as much as 99 weeks of benefits, 26 weeks in state benefits and up to 73 weeks in federal benefits. It has been extended 11 times since it was put in place amid the financial crisis by then-President George W. Bush.
As many as 23.9 million people have received the benefits since 2008, the report said. The administration’s analysis estimated the effect of extending the program for a full year, maintaining the current rules of the program and compared it to what would happen if the benefits were allowed to expire.
Ending the extra benefits would have the effect of reducing the income of job seekers, driving down consumption. The resulting reduced demand would cost as many as 240,000 jobs, the report said.
The length of the extra assistance has been ratcheted back through the extension renewals and now has a maximum total of 73 weeks, though most states average fewer.
“These have been extraordinary extensions, and the Republican position all along has been, we need to get back to normal here at some point,” Representative Tom Cole, an Oklahoma Republican, told reporters on Dec. 3, according to the Associated Press.
Congressional Democrats may seek to attach an extension to the legislation that emerges from budget negotiations which are scheduled to conclude later this month.
House Democrats, led by California Representative Nancy Pelosi, the House Minority Leader, scheduled a hearing today on unemployment to increase pressure on Republicans. Obama, whose economic aides started calling for an extension last month, hit on the issue in remarks yesterday.
“Christmas time is no time for Congress to tell more than 1 million of these Americans that they have lost their unemployment insurance, which is what will happen if Congress does not act before they leave on their holiday vacation,” Obama said in a speech on income inequality in the U.S..
The non-partisan Congressional Budget Office said the cost of the extension proposed by House Democrats would be about $25 billion, according to an analysis provided to Representative Chris Van Hollen, a Maryland Democrat.
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