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By: Jasmine Tucker, Director of ResearchPosted on November 30, 2010 Issues: Tax & Budget

Just this morning, Senator Max Baucus (D-MT) introduced important legislation that would continue for one year the emergency federal unemployment insurance (UI) program for jobless workers who have been seeking employment for six months or more. This program is currently set to expire today, leaving two million jobless workers facing benefit cutoffs in December, and millions more in the following months.

Recently released state jobs data show that unemployment rates in the states remain at record highs, with several states more than doubling their pre-recession numbers. The ranks of the long-term unemployed also have reached record high levels, as close to 42 percent of the nearly 15 million jobless workers (including 44 percent of the 5.5 million unemployed women) have been unemployed for at least six months. (See our full report on unemployment rates and the workers at risk of losing benefits in each state.) Amid these dismal figures, however, there is one bright spot: unemployment benefits lifted 3.3 million people, including nearly one million children, out of poverty in 2009.

With unemployment projected to remain close to its current 9.6 percent rate through the end of next year, it is clear that the need for the emergency UI program continues. But it is not just struggling families who depend on federal UI benefits; the economy does, too. Goldman Sachs analyst Alec Phillips recently estimated that allowing emergency UI benefits to expire at the end of this month would shave half a percentage point from GDP growth—growth that was at an annual rate of only 2 percent during the third quarter of this year. The Department of Labor estimates that for every dollar spent on unemployment benefits, two dollars are put back into the economy—more than four times the return on extending tax cuts for the wealthiest 2 percent of Americans. The Economic Policy Institute recently found that “[c]ontinuing to provide emergency unemployment compensation would generate 531,000 jobs in 2011 and 172,000 in 2012, roughly 5.0 times as many as would be created by an extension of the upper-income tax cuts.”  Despite this evidence, some Members of Congress oppose extending critical UI benefits while arguing that an extension of tax cuts for the wealthy is necessary to create jobs.

President Obama met with House and Senate leadership today to begin an effort to “break through [the] logjam” surrounding the expiring tax cuts. Let’s hope our leaders in Washington eventually reach consensus around the logical conclusion: maintaining UI benefits that help struggling families and the economy is a sound investment, while extending tax cuts that do neither is not.

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