Disaster Looms if Congress Fails to Renew Jobless Benefits

On December 27, 2013, more than 1.3 million Americans lost their extended unemployment benefits, an emergency measure funded by the federal government to allow the long-term jobless to continue collecting benefits after the expiration of their home state's program. While state benefits generally end after 26 weeks, the crisis-era extension program, in effect since 2008, allows the benefits' timeline to stretch to somewhere between 54 and 73 weeks.

Senate Democrats plan to vote on a program renewal when Congress reconvenes on Monday, but House Republicans may vote down such a proposal, claiming that the cost is too high. Not extending the program, however, could have detrimental effects not only on hundreds of thousands of American families, but on a still-unstable economy, some analysts say.

Long-term jobless will suffer
The average monthly payment of $1,166 will be sorely missed by those who lost their benefits this past Saturday, but that's only part of the picture. According to the Democratic members of the congressional Ways and Means Committee, close to 72,000 additional persons will drop off the benefit rolls each week until mid-2014. This adds up to an astounding 1.9 million people -- on top of the current 1.3 million -- who will face life without a job or unemployment benefits by the end of June.

That's well over 3 million families that could be pushed into poverty, with states that were hard-hit by the recession leading the way. In California alone, nearly 540,000 will be left without that backstop, with another 260,000 in New York, and almost 180,000 in New Jersey.

A body blow to a recovering economy
The personal suffering will be terrible enough, but the damage to the fragile economy is sure to cause further disruption. Monthly stipends are recycled back into the economy as recipients buy the necessities of everyday life. Preserving that cash infusion, despite the cost of the program, could increase the country's gross domestic product by 0.2% this year, while adding another 200,000 jobs. 

Another problem involves the unemployment rate, which could drop by 0.5% as the long-term jobless are no longer counted as "looking for work." A similar scenario occurred last year in North Carolina, when 170,000 people lost jobless benefits in a bid to cut state costs. The state's unemployment rate dropped quickly to 7.4% from 8.8% as those people were no longer considered unemployed.

A drop in the national unemployment rate could have more serious consequences. The Federal Reserve has specified a jobless rate of 6.5% as one economic indicator that would prompt the Fed to cut back on its accommodative monetary policy and consider raising short-term interest rates.

While the Fed stresses that interest rates will very likely stay low well beyond the time the jobless rate hits the 6.5% mark, a falling unemployment rate will likely spur the speed-up of the so-called taper. It's very possible the announced reduction of $10 billion in the Fed's monthly $85 billion bond and mortgage security buying plan could be accelerated if the jobless rate hits 6.5%, particularly if the rate continues to drop.

This could send long-term interest rates surging, hurting housing and the greater economy. Clearly, there are other factors, such as inflation, that the Fed will consider as it moves to wean the economy from its quantitative easing policy. It is notable, however, that the Federal Open Market Committee clearly regards a national unemployment rate of 6.5% as a sign of an improving economic climate -- not the byproduct of shutting off the benefit supply to those who have been unable to secure viable employment.

President Obama, National Economic Council Director Gene Sperling, and Senate Democrats are pushing for an extension of benefits when Congress reconvenes on January 6. For the sake of the U.S. economy, let's hope they get their wish.

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  • Report this Comment On January 04, 2014, at 10:18 AM, F2read wrote:

    This leftest does not care about the unemployment benefits. If he cared about people he would not point out all the damage that a couple of hundred thousand people being with a job or benefits will do to the economy. This is nothing to the damage Ovomitcare is going to wreak ever ones income. It seems they can't wait until the U.S. is another failed country. Just like Russia or South Africa. Liberalism has been tried to death.

  • Report this Comment On January 04, 2014, at 10:52 AM, Katsdad wrote:

    Of course, to this government it's just another crisis to exploit...........

  • Report this Comment On January 04, 2014, at 11:17 AM, cgbeauchamp1958 wrote:

    You forgot to mention that American taxpayers would save $350 - $400 million dollars/wk.

  • Report this Comment On January 04, 2014, at 11:25 AM, FredBastiat wrote:

    What is the problem with Republicans? Don't they understand that once the Government starts providing handouts those handouts can Never Ever be stopped? These "unemployed" individuals must be given money until they die or go on Social Security - whichever comes first!!!

  • Report this Comment On January 04, 2014, at 11:26 AM, ImtheBaldEagle wrote:

    Don't know what disaster you are talking about. These people never had any extended benefits to be taken away. Obama don't get to have it both ways - he don't get to claim the economy recovered 4 years ago and now we still need emergency benefits.

  • Report this Comment On January 04, 2014, at 11:30 AM, JePonce wrote:

    Do with them what government has done with the other 91,521.000 unemployed citizens.

    Just drop them from the U.S. Department of Labor, Bureau of Labor Statistics, labor force count.

    Problem solved.

  • Report this Comment On January 04, 2014, at 11:40 AM, CountryBarks wrote:

    Nonsense. The arguments used here are broadly applicable, and used by liberals, to justify every expenditure of taxpayers' money. Studies have shown that long-term UI is a detriment to getting a job. Also, there is no reason to expect that things will be any different at the expiration of the added time for payments. May as well face the music now.

  • Report this Comment On January 04, 2014, at 11:55 AM, Helmetbreaker wrote:

    The disaster that is looming has nothing to do with extending unemployment! The problem is an incompetent socialist boob that has been promising jobs for five years, has policies that forced 26 million to quit looking jobs, has signed, lied and promoted a program called ACA (ObamaNOCare) that is destroying our healthcare system, has encouraged class warfare, racism, and income redistribution! And that's an abbreviated list of his destructive plan to put America under!

  • Report this Comment On January 04, 2014, at 11:58 AM, Heidicode1 wrote:

    Was it Benjamin Franklin, or some other wise sage, who said "the worst thing you can do is make the poor comfortable." Translation: Don't provide the poor (unemployed) with so much money and benefits that they not only are able to satisfy all of their basic needs but can also satisfy most, if not all, of their wants as well. This will lead to a loss of drive and independence and instead create a feeling of contentment and dependence in the individual.

  • Report this Comment On January 04, 2014, at 12:18 PM, 1986rolls wrote:

    This is a move to start another entitlement program. Obama wants to redistribute the wealth. What better way to do it than create a new entitlement program. Permanent Unemployment benefits equal another addition to the Government Dole programs. Expand reliance on the Government which solidifies Liberal voting blocs.

  • Report this Comment On January 04, 2014, at 12:21 PM, Gotlift wrote:

    The last I read from the Obama administration was the economy was doing nicely. Unemployment was decreasing rapidly. They should have no problem finding a job. This government has no problem spending tax payers money.

  • Report this Comment On January 04, 2014, at 12:28 PM, bettygodda wrote:

    Why look for a job when the government will pay you to stay home. All they are doing is creating another form of welfare for those who enjoy sitting home and taking all they can get for doing nothing. There are jobs out there, there is no incentive to look as long as the government keeps sending those checks. Why not say, "you can collect, lets say $1100.00 a month and we will only pay you the difference between what you earn and the $1100.00 but you have to find some kind of a job and earn a wage before you get anything."

  • Report this Comment On January 04, 2014, at 1:12 PM, Gotlift wrote:

    WASHINGTON (Reuters) - U.S. factory activity held near a 2-1/2-year high in December and the number of Americans filing new claims for jobless benefits fell again last week, suggesting the economy was poised for stronger growth in 2014. Which is it boys?

  • Report this Comment On January 04, 2014, at 1:28 PM, hobo21 wrote:

    there seems to be no end for democrats to buy votes from people that just don't won't to work. at one time in this country before they put that buffon in office you had people of all nationalitties that wanted to work,now they want to sit and have a check mailed to them. at least let them go down to a designated bullding and sign in to pick up some one else's hard earned money.

  • Report this Comment On January 04, 2014, at 1:58 PM, piasabird wrote:

    If the situation is so bad, why are we forcing people out of their insurance, doubling and tripling their insurance rates? Democrates are all full of themselves. On one hand they say the economy is improving and on the other side they say we need to extend unemployment benefits so long that it becomes welfare. I have an Idea! Round up all the illegal immigrants and ship them all out of our country. Hire some extra border patrol, and then bring back out troops and station them all on our borders. Which lie do you want us to believe?

  • Report this Comment On January 04, 2014, at 2:03 PM, piasabird wrote:

    Just print some more money so the price of gold will go up to $3,000 an ounce and Gas will be $5.00 a gallon.

  • Report this Comment On January 04, 2014, at 2:04 PM, NOTvuffett wrote:

    Maybe I will take a 2yr vacation on your dime, lol.

    This is exasperating. If the govt. takes a dollar out of my pocket and then runs it through a massive bureaucracy, then gives pennies to those that they claim to help, how does it benefit me? To add insult to injury, they also claim that this is the most efficacious thing to do to spur economic growth, lol. They even claim that it will be multiplied in the economy, lol.

    By simple logic, I could spur the economy by quitting my job and drawing unemployment benefits, lol.

  • Report this Comment On January 04, 2014, at 2:06 PM, piasabird wrote:

    Do you know why there are no jobs in your state? You keep raising the taxes and making tough rules and legislation that are hard on businesses. Then you turn around one day and there are no jobs. Just lower your taxes. It is like magic.

  • Report this Comment On January 04, 2014, at 2:21 PM, rbrooks715 wrote:

    we spent 100 billion in corporate welfare, 56 billion in foreign welfare and 39 billion in farm welfare in 2012.

    none of the conservatives are complaining about that.

  • Report this Comment On January 04, 2014, at 2:25 PM, rbrooks715 wrote:

    it is amazing how many do not understand basic economics.

    we need more customers. we need to generate revenue. we need to convince more people to spend a dollar.

    or we can keep giving all of the money to business' and the wealthiest.

  • Report this Comment On January 04, 2014, at 5:38 PM, ridcnisop wrote:

    Sooner or later all of us must forgo unemployment. Mine ended 2 years ago and since then, I've only worked full time for 6 months. I haven't died and the sky didn't fall. Crap happens and sooner or later anyone's U.E. will run out.

    If not, then please put me back on the payroll. I was making $450.00/wk. and is certainly better than what I'm making now.

  • Report this Comment On January 04, 2014, at 5:54 PM, saphirantcross wrote:

    Why I am not conservative:

    Corporate tax breaks/aid: They're the job creators. "Trickle-Down" Economics works -- you give the rich more money, they spend it employing the poor.

    Women/Children: Sure, let's give some help, but not too much -- public education is inferior to charter schools and religious education, and women's shelters/single mom support should be temporary as they tend to return to abusive situations. Women need to lead virtuous lives, and spending money on Family Planning and Abortion is ruining civilization and families everywhere.

    Unemployed men: They are what is ruining the economy. Get them employed or behind bars! If left unchecked, they'll become homeless or worse... liberals!

    Unemployed men who are disabled: if they're right with God, they'll end up in a better place when their time comes. If not, hopefully they die quickly.

    -----

    The money is going SOMEWHERE. Neither party cares about the National Debt -- if it's Liberals, they spend it on pet projects and the poor. If it's Conservatives, they spend it on corporations who abuse federal money and pocket it.

    All things being equal, I'd rather see it spent on the unemployed, but something tells me there's some corruption involved and there's people who aren't unemployed getting the money anyway.

  • Report this Comment On January 04, 2014, at 6:12 PM, HoosierRube wrote:

    Oh come on. Fear mongering at its best.

    Let's see, New York, New Jersey, California. Hmmm, all blue states.. Hmmmm, all heavily unionized. Hmmmm, all high tax states. All locations where they practice liberal vote buying.

    Here's an idea. Do away with union carveouts and give EVERYONE the chance to compete. Get rid of big government over regulation that keeps someone from making money because they cant afford the fees and licenses. And by all means, quit taking their money with all of these taxes. You cant fart these days without getting taxed. And even unemployed people fart.

    And one last idea, why do you folks keep looking at unemployed folks as something less than capable and human? Really, your ego is amazing. Actually, they are much smarter than you. While you're out working, they are watching Dr. Oz and Ellen.

    Take your foot off of peoples necks and you'll soon learn EVERYONE has just as much potential as you do and they DO NOT want your self-congratulatory pity. Get over yourself and leave people be.

  • Report this Comment On January 04, 2014, at 6:38 PM, KateB83 wrote:

    I hope those losing their benefits suffer greatly in the coming weeks. Some small measure of reconciliation for the money they've un rightfully mooched from the rest of us.

  • Report this Comment On January 04, 2014, at 6:41 PM, HoosierRube wrote:

    Lies, Damn Lies and Statistics.

    Lets look at these 'statistical claims' from this poster.

    1.<i> Preserving that cash infusion, despite the cost of the program, could increase the country's gross domestic product by 0.2% this year, while adding another 200,000 jobs.</i>

    How does it increase GDP? You cant just say something like that and not have any logic to back it up. Lets look at this same situation in another way. There is no NEW cash infusion. Its the same cash that I may have spent on a new pair of pants or maybe invested in a business that would actually use that money to grow and hire. You're just taking the same money and letting someone else spend it. And worse, not a penny of it will be invested, it will just be consumed and cease to exist. Econ 101.

    2.<i>A drop in the national unemployment rate could have more serious consequences.</i>

    How do I even address that. You are proposing that low unemployment is a bad thing? I'm too flabbergasted to even counter that arguement.

    3.<i>....and consider raising short-term interest rates</i>

    And thats the bad thing? Do you understand, even for a second, that safe, stable retirements DEPEND on a Treasury Bill that pays an interest rate higher than inflation. You are promoting the next big crime, only this time its on the elderly. What, we just create another program to save the elderly after your last great idea put them in harms way?

    4. There wasnt a single argument in this piece that in any way reflects reality. PERIOD!

  • Report this Comment On January 04, 2014, at 6:53 PM, HoosierRube wrote:

    rbrooks715 said

    'we spent 100 billion in corporate welfare, 56 billion in foreign welfare and 39 billion in farm welfare in 2012. '

    we spent nothing on corporations, we just let them keep THEIR money. Same with the farm welfare claim, we did not give them a penny, just let them keep their money also.

    How do you libs manage with such twisting of reality?

    We (and i mean me and all other tax payers) have never gave corporations money except for the Wall Street and GM bailouts. And soon to be Insurance company bailouts. But thats not the 'welfare' you were alluding to. And Democrats have put the bailouts on steroids. Whats the word, oh yeah, Period.

    In your eyes, the money they make belongs to you. How do you look your children in the eyes?

  • Report this Comment On January 04, 2014, at 8:40 PM, talon80000 wrote:

    motivation is out of need

    so if your UI benefits have expired then it is time to take a job regardless of it pay scale

    get off your asses and contribute to the economy

  • Report this Comment On January 04, 2014, at 8:41 PM, MDS156 wrote:

    TO: Ms. Amanda Alix, The Motley Fool

    The US Government could immediately solve the unemployment issue by forcibly removing 8 million illegal aliens who have American jobs. But that would mean you and the Motley Fool would have to betray Corporate America and Wall Street. Both betrayed the American people. Then again, you and the Motley Fool are not going to bite the hand that feeds you. Michael Dale Smith, Statesboro, GA

  • Report this Comment On January 04, 2014, at 10:07 PM, taloft wrote:

    Sorry, not buying the BS. This article conflates the numbers to draw false conclusions.

    ex. 1.9 mil plus 1.3 mil = 3.2 million PEOPLE, not FAMILIES. So your statement that this is more than 3 million families that "Could" be pushed into poverty is just blatantly conflating the issue. This is 1% of the population. While unfortunate, it doesn't strike me as the crisis people would like to make it out to be.

    If 540,000 people are suddenly off the dole in California that means less than 2% of the state is dropped off the rolls. Considering how many of them voted for the clowns in Sacramento that drove all the businesses out of this state, I'm not feeling too sympathetic. This doesn't even consider the citizenship angle. Reap the whirlwind my union loving friends.

    There is this little gem as well,

    " Another problem involves the unemployment rate, which could drop by 0.5% as the long-term jobless are no longer counted as "looking for work."

    So what you're saying is that the unemployment numbers are being under reported and that we really can't trust any of the numbers given to us by the Government, got it.

    Supposedly, the economy is on the the mend right? So, what's the problem?

    Truth of the matter is that being unemployed sucks. Especially, if you really do want to work and are looking diligently for a new job. We've all been there at some point. The uncertainty is frightening. If that is the case then I have no problem with you collecting unemployment. Just not for two years! After all, your last employer likely paid into the system.

    The problem lies with the vast amounts of fraud being committed by people who just want to sit on their back sides collecting money that the Government takes out of the pockets of people and companies who actually are working. I'm happy to know that the gravy train is finally coming to stop for all the deadbeats. Of course, once this train stops they will all apply for a ticket on the Welfare Express.

    The Government lies about the sheer scope of the problem so that the working stiffs in this country don't realize to what degree they are being taken advantage of. I only want two things from my Government. Keep your hands out of my pocket and leave me alone. I'll take care of myself. After all, that is my responsibility.

    There is an old saying, Figures can't lie but, Liars will figure.

  • Report this Comment On January 05, 2014, at 10:38 AM, rlcoleman wrote:

    Many of the comments are from people who have not lost there job through no fault of their own. I have been on unemployment benefits, and let me tell you, it is hell. The anxiety and stress of not having gainful employment has caused me stress related illnesses. I was not living high of the hog. I had to delve into what little savings I had to keep me and my wife from becoming homeless. You guys and gals just don't get it. Spend some time being unemployed, rejected by employers, and I think you would change your heartless mind set. I would gladly change places with you who are employed. I'll do your job and you can be on unemployment. And I have an MBA degree, so I have ambition. I'm not a lazy do nothing.

  • Report this Comment On January 05, 2014, at 11:31 AM, FSHNT21 wrote:

    This article is totally wrong...

    The Obama Administration tells us unemployment is dropping every month and that they have "created" MILLIONS of jobs in their economic recovery... just ask them...

    There can be no way, with a booming economy such as they have created, that ANYONE could possibly be unemployed for more than 6 months...

    The only "disaster" looming for the elected in Washington is coming into the mid-term elections with 25% of the American workforce (ALL of voting age) out of work and no freebies to rescue them...

    Keep this in mind and vote them ALL out...

  • Report this Comment On January 05, 2014, at 11:43 AM, 2smartforlibs wrote:

    Lets cut the liberal crap. Either there is a disaster and we need to extend unemployment welfare or the U3 is under 8% and the economy is roaring along. One of the other can't be both. Truth is if the regime didn't manipulate the numbers u3 would be 11% this means the regime has been lying for 5 years and the low information kool aid drinkers are to ignorant to know it

  • Report this Comment On January 05, 2014, at 1:12 PM, paul253 wrote:

    If this article represents the sage advice of the Motley Fool, I think you can safely ignore their investment recommendations!

  • Report this Comment On January 05, 2014, at 1:19 PM, chiphenry wrote:

    America keeps failing in the same area, and I wonder if I'm alone thinking this. We need unemployment. I might need it myself one day. Give me the benefit, but not endlessly.

    Reduce the benefit over time. That allows me time to make adjustments to make ends meet, and encourage me to job hunt increasingly unpleasant jobs until I realize working for a wage is better than living on the welfare dime.

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