It’s not just the much-vaunted Bush tax cuts that are set to expire at the end of 2012. Federal emergency unemployment benefits are also facing their expiration date at the end of the year, and that prospect could hasten a “fiscal cliff” for in the personal finances of many Americans. In addition, on a broader scale, if this year’s lame-duck Congress fails to extend the program, the U.S. economy will lose about 400,000 jobs, says a study by the Economic Policy Institute (EPI).
The Emergency Unemployment Compensation program, signed into law at the beginning of the Great Recession in 2008, provides assistance to long-term unemployed workers who have exhausted their state-level unemployment assistance eligibility.
According to Think Progress:
More than five million Americans have been unemployed for longer than six months, and more than two million will lose access to federal unemployment insurance if the program lapses in December. Another million would lose benefits in April if no extension is passed.
Congress last passed an extension early this year, though it cut the number of weeks of eligibility. As a result, 500,000 unemployed workers lost access to the program between the beginning of 2012 and July. Republicans have often opposed EUC’s extension, arguing that it fosters laziness and dependency and prevents the unemployed from searching for jobs, even though EUC requires recipients to conduct job searches and studies have shown that people who receive unemployment insurance work harder and faster to find employment than those who don’t.
EPI found that the unemployment extension would provide a bigger boost to economic growth and create more jobs than an extension of the high-income Bush tax rates:
Spending $30 billion on unemployment insurance extensions in 2013 would increase consumer spending and expand GDP by an estimated $48 billion, raising our $15.8 trillion GDP by roughly 0.3 percent. This increase in economic activity would translate into roughly 400,000 jobs. In comparison, continuing the upper-income Bush-era tax cuts in 2013 would cost $52 billion—nearly 75 percent more than continuing the UI extensions—and generate just 102,000 jobs, nearly 75 percent fewer jobs than the number created by continuing the UI extensions.
Extending unemployment benefits should be an easy call for the 2012 lame duck Congress. Let’s watch to be sure that they act reasonably and responsibly on this one.