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Democrats set for fight to extend unemployment benefits in January

Democrats are gearing up for a major fight in January for extension of federal benefits to 1.3 million long-term unemployed which expired Saturday, after Congress failed to include extension of the program in the two-year bipartisan budget deal passed last week.

Congress went on Christmas break last week without taking action to renew the benefits available to the unemployed who have exhausted benefits provided under state programs.

Although it was known that the program, signed into law in the midst of the 2008 Great Recession by President George W. Bush, would expire on Dec. 28, both Democratic and Republican members of Congress ignored the looming expiration and it was not until early December that the Democrats and the White House first took it up backed by intense media coverage.

Republicans have complained that extending the benefits would cost about $26 billion next year after having cost $252 billion in the past five years.

But Democrats have concluded plans for a major campaign to push for renewal of the benefits in January.

According to CNN, House Minority Leader Nancy Pelosi (D-Calif.) said Friday that the matter would be top priority for Democrats in January, and Senate Majority Leader Harry Reid (D-Nev.) has said he would work to bring a bill to renew the program by Jan. 6.

"I don’t know if our colleagues who have opposed passing the unemployment-insurance legislation know or care about the impact on families. The impact is very, very strong. It hurts the dignity of a family, of a worker," Pelosi said.

Relying on a poll released Monday by Public Policy Polling (PPP), which shows that a majority of voters – including Republican voters – oppose ending the benefits and that Republican members of Congress face a risk of voter backlash in 2014 if they allow it to expire, Democrats have started an intense campaign designed to force Republicans to act.

The strategy is to put pressure on the Republican leadership and on 2014 candidates in swing districts.

Liberal groups such as Americans United for Change are already running ads on cable TV stations attacking Republicans and trying to shame them into action.

According to The New York Times, an ad by the Americans United for Change, says:

"You know who had a Merry Christmas? The richest 1 percent, that’s who. Republicans in Congress made sure of that, protecting billions in taxpayer giveaways. For those facing tough times? Republicans stripped 1.3 million Americans of jobless benefits — folks who want to work, but cannot find a job — kicking them to the curb during Christmas."

Realizing that they will come under heavy pressure given the popular support for continuing the benefits, Republican have indicated willingness to negotiate.

House Speaker John Boehner (R-Ohio) said during the budget deal negotiations that he would consider extending the benefits only if Democrats come up with suggestions about how to offset the cost through cuts to other spending.

But a plan to extend the benefits finally missed the budget deal as both sides failed to come to an agreement on the issue.

Some Republicans have called for a reduction of the duration of benefits.

Sen. Rand Paul (R-Ky.) told Fox News, "I do support unemployment benefits for the 26 weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers. When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy.”

A New York Times reader responded to Paul:

Allow them to stay on unemployment? As if they are all kicking back enjoying a beer.This man has obviously never experienced a moment of desperation in his life! And what is causing perpetual unemployment is the lack of jobs. Does he know there are three applicants for every one job opening! What about Mr. Obama's jobs bill? Whatever happened to that, anyway? I do believe it was blocked by Republicans!

The Emergency Unemployment Compensation program provides up to 47 weeks of benefits to people looking for work. Recipients begin receiving the benefits under the federal program after exhausting state benefits.

CNN reports that government figures show that the average beneficiary receives a weekly check of $300.

After the program was introduced in June 2008, unemployment rate rose from 5.6 percent to 10 percent in 2009, forcing government to extend the benefits several times even though states began cutting back as the economy went into a slow recovery phase.

Congress began reducing the duration of the benefits in 2012.

Recipients are mostly people with a history of stable employment, who later lost their jobs.

Beneficiaries are required to continue searching for work.

According to The Huffington Post, an analysis of Census data by the White House Council of Economic Advisers found that most beneficiaries are middle class with roughly 40 percent of those who have received long-term unemployment benefits having previously earned between $30,000 and $75,000.

Research by the Congressional Budget Office (CBO) also showed that more than two-thirds of recipients have previously had incomes up to twice the national poverty level.

As part of efforts to fight for renewal of the benefits, the White House announced Friday that the administration is backing Sens. Dean Heller [Unlink] (R-Nev.) and Jack Reed [Unlink] (D-RI), who have proposed a bipartisan bill to extend benefits for three months at an estimated cost of $6 billion offset by cuts to farm bill agricultural subsidies.

The Obama administration has warned that allowing the benefits to expire will hurt the economy going through a weak recovery phase because it will cut consumer spending.

According to the Congressional Budget Office and economists at JP Morgan, expiration of the benefits could cut GDP growth by 0.2 to 0.4 percentage points in the first quarter of 2014.

The Economic Policy Institute estimates that expiration could cut job growth by more than 300,000 next year and cause up to 2.5 million Americans to fall below the poverty line.

While some analysts have argued that ending unemployment benefits will lead to a sharp drop in the unemployment rate by as much as 0.5 percentage points because those who lose benefits will be forced to renew job search or accept jobs below the level of their qualifications, others say it would drop unemployment rate mostly because some workers would simply drop out of the labor force altogether, with older workers in particular seeking social security benefits.

However, economists are unanimous that ending the program will increase poverty.