Tags: Jobless | Benefits | Deficit | Concern

More Than One Million May Lose Jobless Benefits Over Deficit Concern

By Dan Weil   |   Thursday, 29 Apr 2010 03:13 PM

Congress will likely stop extending the limit for receiving unemployment benefits because of concern about the exploding deficit.

That means the number of unemployed Americans who will stop getting the aid, after 99 straight weeks of checks, will break one million in coming months, according to Bloomberg.

Congress already has lengthened the period for which the unemployed may receive aid – 46 weeks originally – three times since the recession began in 2007.

Democrats who have provided the support for past extensions say deficit worries make it impossible to go any further. The deficit totaled $1.42 trillion last year and is likely to hit $1.5 trillion this year.

Unemployment aid has become one of the federal budget’s fastest-growing components, with costs this year likely to reach $200 billion. That’s six times what was typically spent before the recession.

“You can’t go on forever,” Senate Finance Committee Chairman Max Baucus said, according to Bloomberg. “I think 99 weeks is sufficient.”

“There’s just been no discussion to go beyond that,” said Sen. Byron Dorgan, D-N.D.

Democrats may pay their stance in November’s Congressional elections.

“They’re damned if they do and damned if they don’t,” Stuart Rothenberg, publisher of the Rothenberg Political Report, told Bloomberg.

“Voters are sensitive these days to spending and deficit issues, yet there are going to be people who need help, and if the administration ignores them, they’ll look rather callous.”

To be sure, jobless claims numbers are showing some improvement.

The Labor Department just reported that initial applications for jobless benefits dropped by 11,000 to 448,000 last week, the lowest level in four weeks.

Earlier this week, Federal Reserve Chairman Ben Bernanke warned that failing to curb federal budget deficits would do "great damage" to the U.S. economy in the long run.

Bernanke again urged the White House and Congress to come up with a credible plan to reduce the nation's red ink. Failing to do so would push interest rates higher — not only for Americans buying cars, homes and other things — but also for Uncle Sam to service its debt payments, he said.

All that would sap national economic activity and could cause employers to cut back on hiring, Bernanke said, according to the Associated Press.

The Fed chief made his most urgent call yet to get the nation's fiscal house in order. His plea came in prepared remarks to the first meeting of President Barack Obama's commission to tackle the soaring deficit.

"The path forward contains many difficult trade-offs and choices, but postponing those choices and failing to put the nation's finances on a sustainable long-run trajectory would ultimately do great damage to our economy," Bernanke said.

Obama wants the panel to come up with a plan to cut the deficit so that it is no bigger than $550 billion by 2015, an amount equal to about 3 percent of the total U.S. economy. That would require deficit savings in the range of $250 billion or more.

The options for slicing the deficit — cutting spending on popular entitlement programs like Social Security and Medicare and raising taxes — will be difficult for the White House and Congress to sell to the American public.

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Congress will likely stop extending the limit for receiving unemployment benefits because of concern about the exploding deficit. That means the number of unemployed Americans who will stop getting the aid, after 99 straight weeks of checks, will break one million in...
Jobless,Benefits,Deficit,Concern
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2010-13-29
 

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