Congress Extends Unemployment Checks for Christmas

About 1.2 million people would exhaust their unemployment insurance by the end of the year without the extension.

Jarred by new jobless alarms, Congress raced to approve legislation Thursday to keep unemployment checks flowing through the December holidays and into the new year for a million or more laid-off Americans whose benefits are running out.

The Senate's vote followed Thursday's government report that laid-off workers' new claims for jobless aid had reached a 16-year high and the number of Americans searching for work had surged past 10 million.

The White House, which had opposed broader legislation containing the benefits extension, urged passage of the new version and said President George W. Bush would quickly sign it.

As Congress prepared to leave town — perhaps for the year — there was no such resolution on helping the auto industry, a disaster in the making that could lead to hundreds of thousands if not millions of additional lost jobs. Democratic leaders said they could return to Washington in mid-December to vote on rescue loans if the carmakers first present a plan on transforming and modernizing their operations.

As for the jobless benefits, about 1.2 million people would exhaust their unemployment insurance by the end of the year without the extension, sponsors said. The measure is estimated to cost about $5.7 billion, although economists put the positive impact at $1.64 for every dollar spent on jobless benefits because the money helps sustain other jobs and restores consumer confidence.

"Putting money in the hands of unemployed families means they will be able to pay their rent and utility bills, buy groceries and clothe their children," Sen. Dick Durbin, D-Ill., said after the voice vote in the Senate. "It is money that will create economic growth in America."

The House had approved the bill in October.

More than 1.2 million jobs have been lost so far this year, and the civilian jobless rate is at a 14-year high of 6.5 percent.

Thursday's Labor Department report said claims for unemployment benefits jumped last week to 542,000 the highest level since July 1992 and fresh evidence of a rapidly weakening job market that is expected to get even worse next year.

The legislation as approved would provide seven additional weeks of payments to people who have exhausted their benefits or will exhaust them soon. Those in states where the unemployment rate is above 6 percent would be entitled to an additional 13 weeks above the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.

The benefits provided would be in addition to 13 weeks of federally funded extended benefits approved by Congress last June.
The vote could wrap up this session of Congress — with the possibility of the December return. The Democratic leaders' main condition for that special session was that the Big Three automakers first present a plan showing how federal aid would help them modernize.

"Until we can see a plan where the auto industry is held accountable," said House Speaker Nancy Pelosi, "we cannot show them the money."

"We are prepared to come back into session the week of Dec. 8 to help the auto industry," Senate Majority Leader Harry Reid said. "But only if they present a responsible plan that gives us a realistic chance to get the needed votes."

Congressional Democrats had sought to move legislation that would direct $25 billion from the $700 billion financial rescue plan to the automakers to ensure they can stay in business until the spring. They abandoned those plans this week in the face of resistance from the White House and Senate Republicans.

The broader economic questions of what further actions Washington must take to avoid more home foreclosures and rectify staggered financial markets will probably have to wait until January, when the new Democratic-dominated Congress will convene and Barack Obama will be in the White House. An economy-stimulating package that could run into the hundreds of billions of dollars is likely to be on the agenda when the next Congress opens.

Treasury Secretary Henry Paulson said Thursday that the financial crisis now plaguing the world economy is something that happens "once or twice" in 100 years.

The need to address the deteriorating job situation was one area that everyone could agree. "The recent financial and credit crisis has slowed the economy, and it's having an impact on job creation," White House press secretary Dana Perino said in urging Congress to pass the benefits extension.

Congress has enacted federally funded extensions seven times in the past 50 years during economic slumps — in 1958, 1961, 1972, 1975, 1982, 1991 and 2002.

The Bush administration contends that past extensions occurred only when the unemployment rate was considerably higher.
Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes, either state or federal.

Before Thursday's quick resolution, the White House had threatened to veto a broader, $61 billion stimulus bill that would have helped states maintain Medicaid benefits and extend funds for public works projects in addition to the extending the jobless benefits.

In yet another bad sign for the economy's near future, the private, New York-based Conference Board said Thursday that its monthly forecast of economic activity declined 0.8 percent in October. Over the past seven months, the index has declined at a 4.7 percent annual rate, faster than at any other time since 2001.

Most of the decline was due to the drop in stock prices, a decline building permits and sagging consumer expectations.

Copyright AP - Associated Press
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