1.3 million losing unemployment benefits Saturday

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WASHINGTON (AP) — More than 1 million Americans arebracing for a harrowing, post-Christmas
jolt as extended federalunemployment benefits come to a sudden halt this weekend, entailingpotentially
significant implications for the recovering U.S. economy andsetting up a tense battle when Congress
reconvenes in the new year.Forfamilies dependent on cash assistance, the end of the federalgovernment’s
"emergency unemployment compensation" will mean somedifficult belt-tightening as enrollees
lose their average monthlystipend of $1,166.Jobless rates could drop, but analysts say theeconomy may
suffer with less money for consumers to spend on everythingfrom clothes to cars. Having let the
"emergency" program expire as partof a budget deal, it’s unclear if Congress has the appetite
to start itanew.An estimated 1.3 million people will be cut off when the federally funded unemployment
payments end Saturday.Some214,000 Californians will lose their payments, a figure rising to morethan a
half-million by June, the Labor Department said. In the last 12months Californians received $4.5 billion
in federal jobless benefits,much put back into the local economy.More than 127,000 NewYorkers also will
be cut off this weekend. In New Jersey, 11th amongstates in population, 90,000 people will immediately
lose out.Startedunder President George W. Bush, the benefits were designed as a cushionfor the millions
of U.S. citizens who lost their jobs in a recessionand failed to find new ones while receiving state
jobless benefits,which in most states expire after six months. Another 1.9 million peopleacross the
country are expected to exhaust their state benefits beforethe end of June."When Congress comes
back to work, their firstorder of business should be making this right," President Barack Obamasaid
last week at his year-end news conference.But Obama has noquick fix. He hailed this month’s two-year
budget agreement as abreakthrough of bipartisan cooperation while his administration workswith
Democratic allies in the House and Senate to revive an extension ofjobless benefits for those unemployed
more than six months.TheObama administration says those payments have kept 11.4 million peopleout of
poverty and benefited almost 17 million children. The cost ofthem since 2008 has totaled $225 billion.At
the depth of therecession, laid off workers could qualify for up to 99 weeks ofbenefits, including the
initial 26 weeks provided by states. The mostrecent extension allowed a total of up to 73 weeks,
depending on thestate.Restoring up to 47 extra weeks of benefits through 2014 would cost $19 billion,
according to the Congressional Budget office.HouseDemocrats led by Reps. Sander Levin of Michigan and
Chris Van Hollen ofMaryland sought to include an extension through March by offsetting thecosts with
potential farm bill savings. They were rebuffed.SenateDemocrats and some Republicans plan another push
in 2014. Sens. JackReed, D-R.I., and Dean Heller, R-Nev., have introduced a bill offering asimilar
three-month extension, and Senate Majority Leader Harry Reid,D-Nev., has promised to bring it up. But as
with much in Congress, anextension is no sure thing.House Speaker John Boehner spoke withObama about an
extension earlier this month. Boehner and said his caucuswould consider the possibility "as long as
it’s paid for and as long asthere are other efforts that will help get our economy moving
onceagain." He said White House has yet to introduce a plan that meets hisstandards.For other
Republicans, the bar is higher. Many of themlook at signs of economic growth and an unemployment rate
now down to 7percent and expected to drop further as evidence the additional weeks ofbenefits are no
longer necessary.The effect of jobless benefitson the unemployment rates has been fiercely debated for
decades. Toqualify, people have to be seeking work. Tea partiers such as Sen. RandPaul of Kentucky argue
that the payments aggravate rather than relieveunemployment.The benefits allow some jobseekers to hold
out forhigher wages. Without the benefits, they might accept lower-paying jobs,reducing the unemployment
rate. Others may be looking for work only tokeep the benefits flowing and will drop out of the job
market entirelyonce the checks stop. In theory, that also would push the unemploymentrate lower.The flip
side is that the benefits — in addition toalleviating suffering — get spent on consumer goods,
stimulating theeconomy and creating jobs.Extended unemployment insurance "isreally a lifeline to
help pay the bills, put food on the table, and putgas in the tank so people can look for work,"
argued Maurice Emsellem,policy co-director at the left-leaning National Employment Law
Project.MichaelFeroli, an analyst at JPMorgan Chase, said ending the extended benefitswill lower the
unemployment rate by half a percentage point as thelong-term unemployed leave the labor force. While
that statisticalchange may look good on the surface, Feroli cautioned the drop could beaccompanied by a
similar decrease in consumer spending. That would alsohurt clothing retailers, car dealers and other
Main Street businesses.Extendingthe program, on the other hand, would boost GDP growth by some
0.2percent and increase full-time employment by 200,000 next year, theCongressional Budget Office
estimated, but at the price of increasingthe government’s debt.Advocates of extended benefits
saycommunities hardest hit by the recession will feel the sudden loss ofcash in circulation the
most.They cite a set of their owntroublesome figures: three jobseekers still competing for each
opening;some 4 million people in the ranks of long-term unemployed; unemploymentlasting on average 37
weeks, two months longer than most states provideinsurance.Copyright 2013 The Associated Press. All
rightsreserved. This material may not be published, broadcast, rewritten orredistributed.

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