Super Committee failure could hit unemployed in the wallets

Inside the U.S. Capitol (Pic by ThatMakesThree, via Flickr)

The failure of the congressional “Super Committee” to reach an agreement jeopardizes the federal unemployment benefits of almost 2 million unemployed workers, according to the National Employment Law Project.

The “Super Committee” is made up by 12 lawmakers — three Senate Democrats, three Senate Republicans, three House Republicans and three House Democrats — charged with drafting legislation to cut at least $1.2 trillion out of the deficit over the next 10 years.

The National Employment Law Project — which promotes “policies and programs that create good jobs, strengthen upward mobility, enforce hard-won worker rights, and help unemployed workers” — wrote Monday:

The real failure of the Joint Select Committee is not the lack of a deficit-cutting agreement, which poses no threat to the economy, but rather the failure to reauthorize the federal unemployment insurance programs that expire on December 31st. Unless Congress acts promptly, the economy will take another hit in the New Year as two million unemployed workers will lose the modest federal benefits they rely on to get by and that, in turn, support businesses in their communities.

Not eveybody agrees on the impact of the committee’s failure to reach cuts. Accoeding to Mark Zandi, chief analyst at Moody’s Analytics, “the economy will suffer in 2012 if a congressional supercommittee fails to come up with ways to trim the country’s deficits.”

A March 2011 report (.pdf) issued by the Research Institute on Social and Economic Policy and the National Employment Law Project indicates that “unemployment compensation has provided a net benefit to Florida’s economy of over $9.8 billion since the beginning of the recession, combining both the state program and federal extension programs.”

A study released in October by the conservative Tax Foundation shows that Florida has the fifth lowest unemployment benefits in the country.

The Employment Law Project adds that “over the past three years, federal unemployment insurance has helped more than 17 million Americans while they’ve looked for new work in the toughest job market since the Great Depression.”

“Hanging on By a Thread,” a National Employment Law Project report issued in October, indicates that:

  • 1.8 million workers who currently receive federal unemployment insurance or would have begun to receive it will be cut off if Congress does not renew the program before it expires on December 31st.
  • Of these 1.8 million workers, more than 430,000 were laid off as recently as July and will reach the end of their state benefits in January without the prospect of any federal relief, if Congress fails to act.
  • Nearly 650,000 workers in 33 states and the District of Columbia will face an immediate “hard” cut‐off of their benefits in January.
  • Congress has never cut back on federally‐funded unemployment insurance when unemployment was anywhere near this high for this long. The highest unemployment rate when federal benefits were cut by Congress was in 1985, at 7.2 percent. Today, the unemployment rate stands at 9.1 percent.
  • Unemployment insurance kept 3.2 million people (including nearly one million children) from falling into poverty.
The study adds that the average unemployment monthly benefit amounts to almost $1,300 — “only half of basic household expenditures.”

U.S. Rep. Jared Polis was among Colorado Democrats unhappy with the supercommittee’s failure.

“Once again, Congress has failed the American people. This type of dysfunction is becoming more and more typical of Congress,” Polis said in a prepared statement. “This is particularly upsetting considering there were already two bipartisan road maps for resolving our debt crisis that have been submitted. Either the Bowles-Simpson plan or the Gang of Six report can be the foundation for a bipartisan solution to address the debt crisis and ensure that our nation returns to strong financial footing. I call upon Congress to address our fiscal crisis immediately.”

Rep. Diana DeGette had this to say:

“While I join Americans in expressing disappointment that the 12-member Super Committee was unable to fulfill its task of developing a deficit reduction plan, all is not lost. The time has now come for Congress as a whole to fulfill its responsibility to the American people and come together to develop and pass a balanced approach to reducing our national deficit and growing our economy.

“A broad range of economists and the American people understand that reducing the deficit will require a combination of responsible spending cuts, that do not place undue burdens on those who can afford it the least, and adjustments to our tax code, that ensure low-income and middle-class Americans have the same opportunities as the wealthiest among us. It is time for their leaders to understand that as well.

“Congress must end the political gamesmanship that has overwhelmed this session and prevented us from accomplishing important work for the American people. I’m certain my colleagues from both sides of the aisle agree, and will finally focus on a balanced approach that includes the cuts, investments, and revenue enhancements that are essential to America’s ability to reduce our deficit, and ultimately compete in the 21st century global marketplace.”

Senator Mark Udall also blasted the committee for failing to reach agreement:

“Today’s news is disappointing and frustrating for Coloradans who want leaders capable of making tough decisions and guiding our nation through difficult times. Our $15 trillion debt is the biggest national security challenge we face, threatening our leadership in the world. Businesses across the country have told us that they need certainty that our nation’s debt won’t crush our economy in order to start hiring again. And Americans looking for work, at risk of losing their home or struggling to keep a small business running, were counting on Congress to make the first big step toward fiscal responsibility and economic recovery.

“The failure of the super committee means that once again, when it mattered most, Congress failed to do its job. In order to cut our debt, Americans agree that everything needs to be on the table – including spending cuts and revenue increases. Everyone needs to give. Tragically, it seems that some members of Congress were more concerned about a pledge they made to a special interest lobbyist – and protecting their own careers – than in doing the job they were elected to do.

“Where do we go from here? Regardless of who is to blame for the failure of the super committee, we now face automatic cuts across the board, including to defense – cuts that are going to hurt. As one of the small group of senators who pushed two years ago to create what became the Bowles-Simpson Commission on debt and deficit reduction, I’m urging Congress to vote on the Bowles-Simpson plan. It’s a balanced proposal that will make tough spending cuts, raise some new revenues, shore up Medicare and Social Security and get our nation’s economy back on track. Congress should also pass the balanced budget amendment that I’ve proposed, which will prevent special interest tax breaks and protect Social Security, while ensuring Congress will never get us into this mess again.”

Scot Kersgaard contributed to this article.