In an unambiguous message about national GOP policy on joblessness, 1.3 million unemployed workers will lose federal benefit extensions on Saturday—222,000 in California.
Congress is home for the holidays after Republicans blocked attempts to extend claims beyond the initial benefit, which in California is 26 weeks. The odds of reviving the legislation in January without a tradeoff for some equally odious entitlement “reform” do not seem high.
An additional 1.9 million people nationwide will have their benefits run out next year without an extension. Tack on another 3.6 million individuals who would have qualified for the first time. Congress has approved 11 extensions since June 2008.
The long-term unemployed individuals losing their benefits in California are nearly a third of the 712,000 people with active claims. At one time, long-term federal benefit extensions in California added nearly 18 months to the initial six-month claim. Those extensions have been whittled back the past few years, and have now been eviscerated. California’s unemployment rate is 8.5%.
The California economy will miss them. During the years following the housing crash and Great Recession, extended unemployment benefits mitigated hardship and gave people something to spend in stores. It was an effective economic stimulus. The state Employment Development Department (EDD) calculated the benefit to California, from four tiers of federal extensions, at $44.85 billion.
Nationally, federal extensions put $25.6 billion in the hands of the long-term unemployed this year. Some Republicans in Congress were willing to vote for an extension, but wanted an equivalent $19 billion cut from other programs. Others expressed an ideological objection to helping the poor.
Senator Rand Paul (R-Kentucky) told NBC News: “Does it make sense for our country to borrow money from China to give it to the unemployed in America? That is weakening us as a country.” In a Fox News interview, Paul, one of the frontrunners for the Republican presidential nomination for 2016 said, “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. And it really—while it seems good, it actually does a disservice to the people you're trying to help.”
To further discourage people from indulging themselves with unemployment benefits, the EDD installed a new computer system this year that botched thousands of benefits claims and delayed checks for months. The department is still processing some claims by hand.
Three decades of growing income inequality, marked by a shrinking middle class and expanding underclass of working poor and unemployed, has been exacerbated by the recession. The fight over who pays the cost for the policies that tanked the economy will continue for years, adding to tensions between the federal and state governments.
California has been borrowing from the federal government to make its share of unemployment payments (it’s not all from the federal government) since its trust fund ran out of money in 2009. California owes Uncle Sam around $9 billion and has begun paying back interest on the loans.