- (Photo: Reuters/Jonathan Ernst)
Days after the expiry of long-term unemployment benefits for 1.3 million Americans, President Barack Obama is pushing Congress for another extension of the program that many Republicans oppose due to high government spending.
People affected by the expiry of the benefits will join Obama for an event planned for Tuesday at the White House.
"The president will talk about the toll that allowing unemployment benefits to expire has had on 1.3 million Americans, and he'll warn of the negative consequences for the broader American economy if Congress fails to act quickly on this urgent priority," the White House said in a statement.
Congress passed the two-year budget deal last month without extending federal unemployment paychecks for people out of work for longer than six months – a program that had been renewed every year since it was introduced in 2008.
Senate Majority Leader Harry Reid, a Democrat, has said he will hold a vote on temporarily extending federal jobless benefits when Congress returns from its holiday recess Monday. The bill will likely pass in the senate.
However, the Republican-controlled House is not expected to follow suit, as some GOP leaders argue the benefits were meant to be temporary. Besides, even a three-month temporary extension would add another $25 billion to the federal deficit. Republicans says the cost should be offset by spending cuts elsewhere in the budget.
House Speaker John Boehner, a Republican from Ohio, has said he will be willing to consider extending the benefits only if they are funded by other reductions in government spending.
Not extending the program will amount to "abandoning" those affected, Obama said.
"We don't abandon our fellow Americans when times get tough; we keep the faith with them until they start that new job," the president said during his weekly address Saturday.
Gene Sperling, National Economic Council director, told CNBC that long-term unemployment insurance needs to be extended.
"We, as a country, have never cut off emergency unemployment benefits when long-term unemployment was this high," presidential adviser Sperling said. "Emergency unemployment benefits encourages more people to stay in the job market, because they lose those benefits if they're not actively looking for jobs."
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 339,000, the Labor Department said Thursday. Also, employers added 203,000 jobs in November, higher than the 180,000 economists anticipated, and the unemployment rate fell to 7.0 percent.
"Over the course of the year, it will be 4.9 million people affected," Sperling added.
In November, 222,000 Californians were warned their unemployment benefits would end in December, according to National Public Radio.
The lack of unemployment benefits will likely affect other services, too.
North Carolina is a good case study, NPR says. After the state cut the maximum length of benefit down to just 19 weeks, and the weekly maximum amount from $535 to $350, in July, the food bank saw about a 17 percent increase in need over this time last year.
"Individuals that are receiving unemployment benefits are sometimes just above the threshold to receive food stamps, so after those unemployment benefits were cut, then our local [Department of Social Services] officers ... started seeing such an increase in individuals coming and applying for food stamps," food bank director Ron Pringle was quoted as saying.
However, Wells Fargo economist Mark Vitner told NPR the cut in benefits in North Carolina resulted in a significant drop in the unemployment rate.
"The thing that seems to have changed is that some folks who may have passed up on a job because it wasn't all that desirable and didn't pay all that much now seem to be giving those jobs a second look because their extended unemployment benefits have ended," Vitner said.