As Unemployment Benefits Peter Out, So Does The Recovery

Federal extensions of unemployment benefits have ended for over a million Americans since the end of May, as Democrats and Republicans in the Senate have made no progress on a further federal extension of benefits. And while lawmakers are off on vacation, another million and a half Americans will see their jobless benefits dry up by the middle of July.

The moving deadline of unemployment benefits is at a maximum of 99 weeks for the hardest hit states—26 weeks is paid for by the state, then an extra four tiers of federal unemployment benefits follow. States must reach certain levels of unemployment, 6 percent, 6.5 percent, and 8 percent, to be eligible for the second, third, and fourth tiers of federal benefits, respectively. Thirty-three states plus the District of Columbia have over 8 percent unemployment and all but three states have under 6 percent unemployment. And of the states under 8 percent unemployment, only two, Virginia and Maryland, are among the top twenty most populous states in the country.

To put it yet another way, 85 percent of the U.S. population lives in states with over 8 percent unemployment. And over 99 percent of the U.S. population lives in states with over 6 percent unemployment.

And almost half of those on unemployment, 46 percent, have been unemployed over six months. That figure hasn’t been that high since just after World War II.

So unemployment levels aren’t just bad, they’re really fucking bad.

But the overall rate is just under the high of the recession Ronald Reagan fought with spending in 1982, when the unemployment rate hit almost 11 percent. So why, then, is the party of Reagan fighting against extending unemployment benefits by refusing to vote for extensions that aren’t within the current budget?

Republicans in the Senate have filibustered any extension of jobless benefits unless the benefits are paid for—meaning a $34 billion federal budget cut. The recently deceased Senator Robert Byrd would have most likely voted for the extension, but as yet, West Virginia governor Joe Manchin hasn’t appointed a replacement for Byrd’s seat.

Or if healthcare-reform-dealmaking pain-in-the-ass Senator Ben Nelson would vote with his party on one of its longstanding core issues, we could be over with this. How much is it gonna take, Ben?

These convoluted tiers in the federal unemployment extensions started hitting a wall on May 30. Each tier has a number of weeks attached to it, and to qualify for the next tier, the unemployed individual had to file by May 30, but before filing, their current tier would have to run its course. So if you had three weeks left in your second tier the week ending May 30, 2010, you ran out of benefits the week ending June 20, 2010.

And that’s it. No more unemployment. Good luck paying bills.

Still, research presented to the House Committee on Small Business by Mark Zandi of Moody’s Economy.com (and rumored to be John McCain’s financial advisor during his 2008 presidential campaign) two years ago showed that aside from food stamps, extending unemployment benefits has the greatest benefit in GDP of all scenarios involving tax cuts and spending increases, a jump of $1.64 for each dollar spent (food stamps were $1.73). By comparison, a cut in the corporate tax rate amounted to a 30 cent rise and making the Bush tax cuts permanent was only a 29 cent rise.

Statistics are all in how you calculate them, but even given Moody’s involvement as a ratings agency in the financial crisis, Zandi’s numbers damn the regular cries of business interests as being less effective for overall growth than spending on unemployment.

And despite the debt crises overseas, it’s really not the time to be complaining about budget deficits. The strong economic years of Republican control (2000-2008) was the time to be complaining about deficit spending, and yet nothing was done to curtail stimulus and war spending. Republicans even cut taxes during wartime, a historically unprecedented and downright dimwitted move.

Perhaps the reason why the Republicans are gambling with the unemployment benefits of millions of Americans currently out of work is they want the Obama administration to fail more than anything. They know that extending benefits for the unemployed is effective, despite their moralizing tone about budgets, and yet they block it.

But it’s a dangerous gamble. If 2.5 million Americans can’t make their rent or can’t pay their mortgage or can’t pay their credit cards or can’t pay their student loans or can’t pay their utilities because their unemployment benefits have been cut and no one is hiring, then the housing market will experience yet another slump and the lack of spending will undoubtedly deepen the recession.

Have a nice summer vacation, Senators!