Giving the jobless an extra three months of checks makes more economic sense than rebates, but the White House says 'No.' It's up to the Senate now.
About 1.4 million Americans have been officially unemployed for more than six months, the magic cutoff point when government checks stop and the slide toward personal financial ruin accelerates.
Odds are many will remain jobless no matter how hard they scour the classifieds. The simple fact is that there are already several million more job-seekers than jobs, and with payrolls shrinking, things are almost certain to get worse before they improve.
In fact, the Economic Policy Institute estimates that the number of long-term unemployed will grow to 1.9 million by the end of the year.
Given that grim prognosis, it's remarkable that President Bush and House Speaker Nancy Pelosi failed to include an extension of unemployment benefits in the $140 billion stimulus package they recently embraced as a demonstration of bipartisanship.
Reaching across the political aisles is important, but so is using sound economic judgment. And most economists agree that extending unemployment benefits is an exceptionally smart and effective stimulus, because the money tends to be spent immediately on necessities like food and rent.
One popular set of calculations by Mark Zandi, chief economist at Moody's Economy, holds that each dollar in jobless claims generates about $1.64 of economic activity, while the politically-popular rebate checks only generate about $1.26 of activity for each dollar spent. Specialists here at EPI think the difference may be even greater.
There's still a chance that reason will prevail. Senate leaders have wisely ignored a bullying White House and are pushing their own stimulus proposals toward a vote on Wednesday. Chief among them is a package to extend jobless benefits by at least 13 weeks, and up to 26 weeks in states with particularly high unemployment rates.
This is not a novel idea. Unemployment benefits have been extended during previous recessions since the 1970s. The last time was six years ago, when the same president sat in the White House.
So what's different now? Opponents say it's too early in the cycle to act, noting that overall unemployment stands at 4.9%, versus 5.7% in 2002. They argue that we should wait until things get worse. Some even claim an extension of unemployment benefits, which average $282 a week, will make job seekers lazy.
"That's human nature," Sen. Judd Gregg, a Republican from New Hampshire, told the Associated Press. "They stay on unemployment almost until the end and then they find a job."
In truth, however, there are already more long-term unemployed Americans today than there were in 2002. And with an estimated 7.6 million people competing for 4 million jobs (according to recent BLS statistics) blaming the unemployed for their condition hardly seems fair.
Far from encouraging sloth, what's more likely is that extending the period for unemployment checks will allow hundreds of thousands of Americans to keep food in the refrigerator and a roof over their heads for a few extra months. And in the long-run, that's better for all of us.