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Unemployment Insurance To Be Extended, $30 Billion Cost Won't Be Offset

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UNEMPLOYMENT INSURANCE EXTENDED
AP

WASHINGTON -- One of the remaining sticking points holding up a fiscal cliff deal appears to have been resolved, as negotiators have decided to extend unemployment benefits without offsetting the cost.

A source familiar with negotiations told The Huffington Post that lawmakers would treat the provision as "an emergency measure that shouldn't be paid for." A Senate Democratic and Republican source each confirmed the plan.

What that means is that the $30 billion pricetag for a year-long extension will simply be added to the deficit. Republicans have in the past objected to reauthorizing federal unemployment compensation because of its impact on the deficit, though in recessions since World War II Congress has generally added extra weeks of benefits without paying for them.

Over the past several days, lawmakers had tried to find ways to offset the cost of unemployment benefits. They remained at an impasse as recently as Monday morning. Republicans have said little publicly about unemployment insurance during negotiations to avert the fiscal cliff, the nickname for steep spending cuts and tax hikes scheduled to take effect at midnight on Monday.

Getting unemployment insurance extended for a year without the offsets represents a major victory for the administration, which has long touted the stimulative impact and moral necessity of the policy. The Congressional Budget Office says keeping the benefits through next year buys some 300,000 jobs and increases economic growth.

Federal unemployment compensation kicks in for jobless Americans after they use up the standard 26 weeks of aid provided by states. The benefits lapsed on Saturday, halting benefits for more than 2 million Americans. Any missed compensation can be paid retroactively once federal unemployment insurance is reauthorized.

Earlier this year, Republicans pushed for fewer weeks, and got them: Congress reduced the maximum duration of state and federal benefits from 99 to 73 weeks. Only nine states have high enough unemployment rates to qualify for the full duration, and as their rates decline so will the number of weeks of benefits. Republicans earlier this year also won reforms to the unemployment system, including a provision that will allow states to drug test unemployment claimants in limited circumstances.

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