Recovery risked if jobless lose aid: White House

WASHINGTON Thu Dec 2, 2010 3:59pm EST

Men look over jobs listings while searching for employment at a jobs center in San Francisco, California February 4, 2010. REUTERS/Robert Galbraith

Men look over jobs listings while searching for employment at a jobs center in San Francisco, California February 4, 2010.

Credit: Reuters/Robert Galbraith

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WASHINGTON (Reuters) - President Barack Obama said Thursday that failing to extend unemployment aid would be a tragedy for millions of Americans and could hurt the economy, stepping up pressure on Congress to act.

"If we don't do something, seven million people could lose their unemployment insurance," he told a meeting of newly elected state governors. "That's not just a potential tragedy for those individual families. It could have a huge impact on your local economies."

Obama, a Democrat, has asked lawmakers to extend jobless benefits as part of a package of measures he wants passed before Congress goes home for the Christmas holidays.

The White House has warned that failing to extend the benefits, which expired Wednesday, could undermine the country's economic recovery as it pulls out of the worst recession since the 1930s.

Nearly 15 million Americans are counted as unemployed, of whom nearly 9 million are claiming unemployment benefits.


Democrats want to extend jobless benefits for another year but have not scheduled a vote in either the House of Representatives or the Senate.

Republicans insist that the cost of extending the benefits, estimated at $65 billion, be offset by cuts elsewhere in the budget to avoid adding further to the country's debts.

Obama said he hoped both parties would agree to extend the benefits, noting that unemployment insurance traditionally attracts bipartisan support during difficult economic times.

U.S. unemployment insurance for those on long-term aid, which Congress had already extended to up to 99 weeks from a traditional 26 weeks of support, provides around $300 a week.

If Congress fails to act, 2 million people will lose their benefits at the end of the month, the White House said.

That number will rise to 7 million by November 2011, affecting the lives of 40 million Americans if the families of people losing extended benefits are also counted, it said.

The White House Council of Economic Advisers argues the entire economy suffers if jobless benefits lapse because it takes money away from people that would otherwise be spent, denting consumer demand essential to support recovery.

600,000 JOBS

The council estimates this impact could lower U.S. economic output next year by 0.6 percent, at a cost of 600,00 jobs that would have been created if benefits were extended.

"The impact on the individuals is quite significant and the overall impact of the drop-off in their spending from terminating it would be fairly damaging on our nascent recovery," council Chairman Austan Goolsbee told reporters.

Obama has also urged lawmakers to extend tax cuts for middle-class American families due to expire on December 31.

His economic team is negotiating with Democratic and Republican congressional leaders on a compromise.

Obama wants Bush-era tax cuts for wealthier Americans to rise next year. Republicans, who won control of Congress in midterm elections on November 2, want the tax cuts made permanent for all Americans.

The White House has repeatedly pointed out that Republicans are blocking more aid to the jobless while wanting to extend tax cuts for richer Americans.

(Additional reporting by Matt Spetalnick, Patricia Zengerle and Andy Sullivan; Editing by Philip Barbara)

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Comments (10)
elangdon1955 wrote:
Absolutely absurd. If that were the case then more people should lose their jobs so we could gain more jobs. Shouldn’t someone review this pablum before it’s published?

Dec 02, 2010 1:20pm EST  --  Report as abuse
bmcph wrote:
idiots. no wonder the gov is in the state it’s in. Not shelling out more unemployement will lose us 600,000 jobs? Or is the great plan to keep/create more gov jobs to process the unemployement benefits?? Instead of extending unemployement, put a process in place that monitors more closely and pushes those people who are taking advantage of the benefits to get their butts to work!

Dec 02, 2010 1:51pm EST  --  Report as abuse
JimInNevada wrote:
elangdon1955 – The input-out model that furnished the forecast for the observation you question does not distinguish between money that originates as a private paycheck or as an unemployment check. What matters as far as the model is that ending extended unemployment benefits reduces the total amount of money available to be spent on food, housing,cable TV and so forth. Fewer dollars means less demand for those products and services, hence less labor is required for their creation. This is why the best way to stimulate growth is to put more money in the hands of those who have the greatest needs.

Dec 02, 2010 1:59pm EST  --  Report as abuse
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