4About 2.1 million Americans will lose their extended jobless benefits on Dec. 29, leaving many on the brink of poverty, if Washington doesn't renew them as part of a deal on the package of tax increases and spending cuts known as the "fiscal cliff".
An additional 930,000 people will run out of unemployment insurance in early 2013 when their 26 weeks, give or take, of state benefits end, according to the National Employment Law Project (NELP).
Although the issue is far less publicized than other parts of the fiscal cliff, such as income tax increases and entitlement reform, an abrupt cutoff of benefits will have a far more dramatic impact on the well-being of millions of Americans, officials say. "Congress needs to see its way to reauthorize this program so it doesn't lapse," says Judy Conti, NELP's federal advocacy coordinator. "It's the middle of winter, it's the only income some people have, it keeps their homes heated, roofs over their head, and it also allows them to feed their children."
Conti says she has grown increasingly confident in recent weeks that the White House and Congress will agree to renew the so-called emergency benefits another year. While President Obama and Democratic leaders have strongly favored an extension, many Republicans had opposed it.
She worries, however, that an agreement on the fiscal cliff might not be reached until January, creating weeks of hardship for many of the unemployed, even though benefits likely would be provided retroactively.
The program is relatively inexpensive — the Congressional Budget Office estimates it will cost about $30 billion next year vs. $115 billion to government would lose to extend the payroll tax holiday. Each dollar the government pays out in jobless benefits yields $1.42 in economic output because the unemployed tend to spend virtually all their payments, and it has a significant ripple effect on the economy. says Mark Zandi, chief economist of Moody's Analytics. During and after the recession, the federal government provided up to 73 weeks of jobless benefits beyond the 26 weeks provided by most states.
In February, Congress renewed the program but agreed to phase it out this year — with fewer weeks of payments going to residents of states with falling unemployment rates — and to end all federal unemployment benefits at year-end. About 1 million jobless Americans have lost extended unemployment insurance this year. Now, the unemployed receive a maximum of 47 weeks of federal benefits beyond what they get from their state unemployment insurance, which varies from state to state.
Fewer than one in two unemployed workers collect jobless benefits, down from two out of three in 2010. That portion would slip to one in four early next year if the program lapses, NELP says.
Even the conservative Heritage Foundation favors renewing emergency benefits, but for a shorter period. James Sherk, a labor policy analyst at Heritage, supports a maximum of 34 weeks, noting the labor market has improved in recent months.
While he disagrees that the benefits add to economic growth, he says: "There's a humanitarian case for doing it." Conti says 40.1% of the 12 million unemployed Americans have been out of work at least six months — little changed from two years ago. She believes lawmakers will renew the benefits and keep the current maximum of 47 weeks of federal benefits.
Unemployment insurance kept 2.3 million Americans from slipping into poverty in 2011, according to NELP and the Congressional Research Service.