Jobless benefits could be casualty of supercommittee failure

The failure of Congress's so-called supercommittee to forge a deal on deficit reduction could end up making life even tougher for millions of jobless Americans.

Here's why: Last year, in response to the growing jobs crisis, Congress extended eligibility for unemployment benefits to 99 weeks. But that extension will expire in January, meaning that around 1.2 million out-of-work Americans could stop receiving benefits. As part of his plan to boost the economy, President Obama wants to extend the benefits further. The White House had been hoping that a supercommittee deal on the deficit, while not addressing the benefits question directly, could serve as a framework to address several other contentious topics, including the extension of federal jobless benefits. But now that idea's gone out the window--and any plans to extend the benefits could prove a casualty of the panel's failure.

This isn't just about inside-the-Beltway maneuvering--the impact on Americans whose benefits expire would be very serious. A record 49 million Americans--roughly 16 percent of the population--are currently living in poverty, and nearly 7 million workers rely on jobless benefits. A report released today by Wider Opportunities for Women, which advocates for working families, found that nearly half of all Americans lack economic security, leaving them vulnerable to an unexpected economic shock--including the sudden loss of benefits.

The long-term nature of the jobs crisis means that the fallout from a suspension in benefits would spread far and wide among the U.S. population. More than 6 million people have been jobless for 6 months or more--the government's official definition of long-term unemployment. And the average duration of unemployment, which in previous downturns had never risen above 22 weeks, is now more than 39 weeks. In all, nearly 14 million Americans are jobless, and the unemployment rate is at 9.1 percent.

If benefits expire, economic growth would also suffer. Unemployment insurance is among the most effective forms of government stimulus, because it benefits the poor, who have little choice but to spend the money quickly, rather than saving it, so it's quickly dispersed into the economy's bloodstream. Along with the expiration of payroll tax cuts--another potential consequence of the supercommittee's failure--the hit to the economy could be as much as 1 percent of GDP, some economists say.

If Congress doesn't act before the end of the year, the loss of benefits would be unprecedented. Lawmakers have never allowed emergency jobless benefit to expire when the unemployment rate was higher than 7.2 percent, according to the National Employment Law Project, a labor-backed group.

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