Unemployment Insurance Will Promote Economic Recovery
Preventing unemployment benefits from expiring could prevent the loss of more than 500,000 jobs
December 9, 2011
Families have a lot on their minds right now. The holidays are right around the corner and Congress has not yet passed an extension of federal unemployment insurance for millions of Americans.
If Republicans in Congress fail to act before the end of the year, Americans who have lost their jobs will also begin losing their federal unemployment insurance in January. By February, roughly 2 million Americans will have had their benefits cut off.
An extension of benefits would not only ensure a continuation of vital assistance to the unemployed, it also will promote our economic recovery. The Congressional Budget Office notes that unemployment benefits are "both timely and cost-effective in spurring economic activity and employment." And the Economic Policy Institute has estimated that preventing unemployment benefits from expiring could prevent the loss of more than 500,000 jobs.
The Emergency Unemployment Compensation Extension Act of 2011--which I have co-sponsored--would extend the current federal unemployment insurance programs through next year. The legislation would also provide some immediate assistance to states grappling with insolvency within their own unemployment insurance programs by relieving states from interest payments on federal loans for a year and would place a one-year moratorium on higher federal unemployment taxes that are imposed on employers in states with outstanding loans.
These solvency provisions will stop $5 billion in tax hikes on employers in nearly two dozen states, as well as provide $1.5 billion in interest relief. In my state of Michigan, employers will see $237 million in federal tax relief, and the state could save about $1 million in interest payments.
Imagine if all of the unemployed were able to come to Washington. The line of Americans standing shoulder-to-shoulder would extend from the Capitol to Sioux Falls, S.D.
Congress has never allowed emergency unemployment benefits to expire when the unemployment rate was anywhere close to its current level of 8.6 percent, and we should not start now.