Levin helped negotiate legislation granting emergency benefits to long-term unemployed workers in 2008 and is now working to ensure those benefits are extended beyond the end of the year — and even to the end of next year.
“I’m concerned about the high percentage of people who don’t even look for a job anymore,” he said. “It’s pretty amazing to me. I came up the hard way. We were very poor and, frankly, I would have worked at anything. And I did. I was a janitor one time in college, and I learned a trade as a young man. Maybe it’s just a different age.”
Under the law, a state’s unemployment rate and the increase in that rate determines the length of time that laid-off workers will receive benefits. That means that as the economy improves, benefits will slowly taper down. To Levin, that’s an argument for a straight extension of the emergency benefits. Lawmakers don’t need to cut benefits, he says, since they will gradually come down on their own.
“You have built in a reduction of unemployment insurance reflected in the unemployment rates, so I think it would be a serious mistake to further reduce the benefits provided,” he said.
A one-year extension would cost about $30 billion, according to a Congressional Budget Office report issued this week. Levin says he would prefer the cost not be offset.
Economists say that unemployment insurance payments are one of the best ways that governments can stimulate the economy, because recipients will likely spend the benefit checks immediately. Mark Zandi, an economist at Moody’s Analytics, has estimated that every dollar spent on unemployment compensation generates $1.64 of economic activity.
The CBO report estimated that a full one-year extension would boost economic growth by 0.2 percent and add 300,000 jobs.
Unlike previous extensions of the long-term jobless benefits, which tapered benefits down gradually, the law now calls for benefits to end immediately right before the new year, in part to lower the cost. That means that about 2 million people would lose their checks overnight, according to Labor Department information provided to House Ways and Means Committee Democrats.
Many Democrats say they would like to see those benefits continued as part of an overall deal averting the fiscal cliff.
“There are 9,000 Rhode Islanders who will be cut off, so that’s important,” said Sen. Sheldon Whitehouse, D-R.I.
The White House has also signaled it would like to see benefits continued, according to an administration official. But it will be a tough sell to Republican budget hawks.
“After spending $215 billion and adding $180 billion to the debt, more spending on federal unemployment benefits above and beyond what the states already spend would have to be carefully considered during fiscal cliff talks,” a House GOP aide said.
James Sherk, a senior policy analyst at the conservative Heritage Foundation, predicted that lawmakers will extend the additional benefits but scale them back in the same way they did in February.
Before the latest extension, beneficiaries in states hardest-hit by the recession could qualify for up to 99 weeks of benefits. Today, the most they can receive is 73 weeks. Sherk said he would like to see benefits capped around 52 weeks to 60 weeks.
If Congress does not extend the additional aid, most laid-off workers would get only 26 weeks — or six months — of checks.