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As Jed Lewison has reported, congressional negotiators reached a budget deal late Tuesday that will restore $63 billion in automatic cuts, a $23 billion reduction in the deficit and no raise in taxes. A vote in both houses is expected before Congress adjourns Friday for the holidays

Not part of the deal: a 12th renewal of the federally funded Emergency Unemployment Compensation program originally implemented in June 2008 to assist Americans who have been unemployed 27 weeks or more because of the Great Recession. Consequences if last-minute efforts fail to pass separate legislation renewing the extension? As of Dec. 28, 1.35 million out-of-work people will receive no more compensation checks.

Over the next few months, however many of the 1.77 million Americans who have been out of work for 15 to 26 weeks and do not find jobs will exhaust their state compensation benefits and just have to suck it up because the EUC won't be there for them. The National Employment Law Project puts the number who will lose benefits at half the total: 850,000. But it could easily be more.

And, paradoxically, that loss of assistance could bring the unemployment rate down, giving the appearance that the economy has gotten better when just the opposite will have happened. More on that in a minute.

Many Democrats are decidedly unhappy about the failure to include an EUC extension and are seeking a means in the next three days to get it passed somehow. But there is no clear path forward:

“I strongly oppose a budget deal that asks federal employees to endure another pay cut, ends an important economic lifeline for out-of-work Americans, and preserves unfair corporate tax giveaways,” Rep. Raul Grijalva (D., Ariz.), co-chairman of the Congressional Progressive Caucus, said in a written statement Tuesday. [...]

“When long-term unemployment is a very, very serious problem, to my mind you just cannot leave people out there in desperate economic conditions,” Sen. Bernie Sanders (I., Vt.) said leaving the briefing. He did not say, however, that failure to include a renewal of the emergency program would mean he would vote against the budget deal. “I’m going to do everything I can to see that we get it,” he said of an extension.

Good for Sanders. Good for Grijalva. Every Democrat should be making that pledge. But prospects look grim.

Before you read more analysis of this travesty below the fold, please join us in asking members of the House to support an extension of unemployment compensation.

Sen. Jack Reed, D-R.I., who is leading the extension fight in the Senate, made a unanimous-consent request Tuesday to extend the insurance for a year. It failed to advance. “We’ve asked, as Democrats, that this UI proposal be part of the budget negotiations,” Reed said. “We’ve had to seek a stand-alone legislative vehicle” instead.
Even if Reed, Sanders and others succeed in the Senate, there is still the GOP-dominated House to deal with. The only real hope of renewal seems to be if the White House can broker a deal with House Speaker John Boehner. But unless enough liberal Democrats oppose the budget deal because it doesn't include EUC, where's the leverage?

In the vast majority of states, the jobless who are covered by unemployment insurance are eligible for 26 weeks of state compensation at an average of $300 a week, plus 37 weeks of extended compensation under EUC at an average of $269. In the three states with the worst official unemployment rates—Illinois, Nevada and Rhode Island (plus Puerto Rico and the Virgin Islands)—they can collect the maximum allowable 47 weeks under EUC. But in seven states, the long-term unemployed can only collect less than 26 weeks. In Georgia, the worst case, it's only 18 weeks, plus just 25 weeks of EUC compensation.

As Kossack gjohnsit has explained, killing the EUC could mean that the official unemployment rate—an undercount that is now at 7 percent—will go down. Not because people losing their compensation would find jobs, but because they would drop out of the labor force altogether and therefore no long be counted. The longer one is unemployed, studies have shown, the harder it is to find a job, in part because employers are less likely to hire someone out of work for an extended period. Brad Plumer pointed out over a week ago:

That means many workers could drop out of the labor force completely and thus won't be included in the "official" unemployment rate, which could fall as much as 0.25 to 0.5 percentage points.

In other words, it will look as if the labor market has improved, even though it hasn't. Indeed, some researchers argue that the expiration of benefits could even hurt the economy further by reducing consumer spending. The Economic Policy Institute estimates that this lapse could whittle 0.2 percentage points off GDP next year.

It doesn't take "some researchers" to figure that a couple of million people without work or government assistance will definitely be reducing their spending and hurt the economy. Obvious, one would think, even to the wooliest-minded tea partier. But not to the likes of Republican Sen. Rand Paul of Kentucky, who, as Laura Clawson notes, lies about unemployment benefits.

In fact, all or almost all the Republicans, as well Democrats who go along with this devil-take-the-hindmost budget deal, obviously don't care what happens to these long-term unemployed. There are still 4.1 million of those, two-thirds of them already uncovered by unemployment compensation, and millions more who have already dropped out of the labor force because they couldn't find jobs in an economy that has been officially in recovery for 53 months. Out of sight, out of mind and shit out of luck.

Originally posted to Meteor Blades on Wed Dec 11, 2013 at 08:14 AM PST.

Also republished by Daily Kos.

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