1.3 Million US Unemployed Losing Jobless Aid

On Friday, Congress decided to surprise about 1.3 million unemployed Americans with a much more abrupt end to unemployment benefits than they would have expected. President Obama had requested for up to 99 weeks of jobless assistance, but Congress chose to not pass the bill and the funding will no longer be in place. Maybe they noticed the lack of money in the till?

According to The Wall Street Journal:

“The collapse of the wide-ranging legislation means that a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week. It will also leave a number of states with large budget holes they had expected to fill with federal cash to help with Medicaid costs.

“The impasse has been weeks in the making and reflects the deepening concern on Capitol Hill with the nation’s fiscal situation, as well as a hardening of Republican opposition. Democrats had moved several times to pare the cost of the bill in an effort to win support from centrist Republicans and to make up defections from their own ranks […] Senate Majority Leader Harry Reid (D., Nev.) said this third vote on the matter would be the last…

“…Obama administration officials have argued that cutting off government support for the economy too quickly could harm the nascent recovery, and have been pressing both Congress and their international peers to keep the cash flowing. Conservative economists, Republicans and some European leaders say deficit reduction should be a higher priority. The sudden move by Congress provides an unexpected test of that argument.”

The Democrats in Congress tend to support extended unemployment payments because that money, more so than regular wages, tends to used immediately and boosts consumer spending. The spending has been cut in a rather awkward last-minute way that could hurt those counting on aid, but any reduction in government spending offers at least some step in the right direction for reducing the nation’s bloated deficit.

You can read more details in Wall Street Journal coverage of the jobless bill dying due to deficit fears.


Rocky Vega,
The Daily Reckoning