The unemployment rate may have dropped to a five-year low of 7 percent as the US economy slowly recovers. But millions of Americans are still looking for work, and a large number of them – 1.3 million of the long-term unemployed – just lost their unemployment benefits.
As lawmakers and the White House get back to work following the holidays, the issue is taking a predictably political turn.
“Denying families that security is just plain cruel,” President Obama admonished Republicans who have stonewalled efforts to extend benefits for a few more months, even as millions more Americans are set to have their benefits expire in the near future.
“We don’t abandon our fellow Americans when times get tough – we keep the faith with them until they start that new job,” he said in his Saturday address.
Whether House and Senate Republicans will take Obama up on his offer or counterargue that beneficence can itself become cruel and counterproductive will come into sharp focus Monday. That’s when Sen. Majority Leader Harry Reid tries to cobble together 60 votes to extend more benefits for those whose benefits came to an end around New Year’s Day.
Obama’s plea to the charity of Republicans, suggesting they should make it their “New Year’s Resolution” to help the long-term jobless, is part of a building campaign to tie benefit extensions to an election year agenda that Democrats have built largely around solving “inequality” in the workforce. Democrats also pointed to a House Ways and Means Committee analysis that suggests that $400 million has bled out of the economy in just the few days since benefits ended – a figure Republicans dispute.
What’s more, Republicans have argued that $26 billion – the estimated cost of extending current benefits for an extra year – would be a lot of money poorly spent, creating both a disincentive for the unemployed and another fiscal anchor on the US economy.
With the two sides often fighting a battle of economic theory, Democrats count as victories this year the decision by numerous Democrat-controlled states, also on New Year’s Day, to raise the minimum wage to about $10 an hour.
Equally, extending unemployment benefits is “about real people struggling to put food on the table, to make ends meet," Steny Hoyer (D) of Maryland said on a conference call. He added that Republican unwillingness to pony up the cash is “reckless.”
Republicans counter that Obama’s focus on the long-term unemployed is partly an admission of failure of his own economic promises and priorities.
What’s more, they cite a cycle of dependency brought by long-term cash benefits that gnaws away at motivation, even as many older unemployed either retire or manage to move onto Social Security disability.
"When you allow people to be on unemployment insurance for 99 weeks, you're causing them to become part of this perpetual unemployed group in our economy," Sen. Rand Paul (R) of Kentucky told Fox News in December. "And it really – while it seems good, it actually does a disservice to the people you're trying to help."
As a backdrop, about 10 million workers have dropped out of the workforce since Obama took office, bringing the workforce participation to Jimmy Carter era lows.
For many Americans, however, Obama’s plea to help the jobless highlights problems to which many believe Republicans have also contributed.
"Well, I put the blame on the president for not being able to reach out and build coalitions, but it's very hard to build those coalitions because of the nature of the House right now,” political scientist James Thurber of American University told Voice of America in an article Saturday. “I put blame on the Republicans because they're not willing to reach out either. And many of them are quite ideological.”
Widespread sentiments of solidarity with victims of the sputtering US economy means that “it’s politically treacherous for the GOP to be seen as standing in the way of financial help for those still looking for work in a down economy,” writes Ben Wolfgang, in the Washington Times.
That opening for an agreement will be one of the first orders of business next week, as the Senate is scheduled to take a look at a bipartisan deal to extend benefits for at least three more months.
Some 1.3 million long-term jobless lost all their unemployment benefits in the past weeks. They included Mary Lowe of Ironton, Ohio, who told CBS News that the loss of a weekly $362 check from the government could be disastrous.
"It's not a crutch. It keeps a roof over your head, the electric on, the water on," she told the network. "We didn't do anything for Christmas – 50 bucks for our daughter, that was it."
Meanwhile, economists argue pretty much to a draw whether the benefits boost the economy, as Obama argued on Saturday, or puts a drag on it by creating a permanent jobless class with too few incentives to look for work.
More specifically, some economists say there’s a recent precedent to the rippling effects of ending benefits now. North Carolina’s Republican leadership ushered in a law that ended checks to the long-term unemployed in July.
The effect? Perhaps not altogether clear.
The state unemployment rate did drop from 8.8 percent to 7.4 percent in less than six months, suggesting that conservatives may have been right after all.
Others argue that the jobless rate decrease there had more to do with workers dropping out of the workforce than long-term unemployed finding work.