Late yesterday afternoon, news broke of a tentative deal to extend the payroll tax cut, unemployment insurance and the “doc fix” on Medicare reimbursement rates. Only we shouldn’t say that the deal would extend unemployment benefits, because it wouldn’t extend all of them. There will be cuts to the maximum number of weeks of benefits of anywhere between 10 and 36.
The deal, as Sam Stein explains, would pay for the unemployment and doc fix pieces but not the payroll tax cut, the largest of the three, and would extend everything to the end of the year. The bill would cost around $160 billion, but the offsets would add up to only $50 billion, then. So what are the offsets, and what are the concessions on the unemployment program?
According to a Senate Democratic aide, to pay for the cost of extending unemployment insurance (at a price of $30 billion), the government would hold a spectrum auction to sell wireless bandwidth and would increase federal employee contributions to pension plans.
The aide said the maximum duration of unemployment benefits would technically be 89 weeks. That level, however, would apply only to the hardest hit states. The aide conceded that the more accurate number for maximum benefits was 75 weeks. But even this figure was contested by a Republican congressional aide, who said that, “the maximum number of weeks of unemployment benefits in most states will be reduced to 63 weeks.” As of 8 p.m. Tuesday night, the difference in numbers remained unexplained [...]
As for the doc-fix, which prevented a major cut in payments to doctors serving Medicare beneficiaries, the cost would be covered by hospital fees, according to the Democratic aide. Benefits to Medicare recipients won’t be touched.
Let’s set aside the notion that we’re paying for increased Medicare reimbursement rates to doctors by taking the money from the hospitals they work at. And let’s focus on the unemployment piece. First, there’s a Wisconsin-style increase in the pension contributions for federal employees. Then there’s this spectrum auction, which has been a possible pay-for in plenty of other deficit-reduction bills before, so no surprise to see it there, but basically you’re selling off a public asset. And then there’s the reduction in weeks.
The maximum 99-week benefit was always a feature for the hardest-hit states, so that doesn’t change much. So jobless workers in those states would lose out on 10 weeks of benefits. For the rest, you’ll either see a cut from 79 to 75 weeks, or all the way to 63. I’m guessing there’s a ramp down to 63 over time which the Democratic aide doesn’t want to explain.
The unemployment system was never going to retain the 99-week benefit forever, especially as the overall rate fell. But we’re not really at the point where the crisis has abated yet, ESPECIALLY for the long-term jobless, which is actually where the crisis is now located. So this hits the very victims of that crisis the hardest.
In addition, there are some changes to the unemployment system as a whole:
The unemployment extension also is coupled with a voluntary “Georgia Works” program, which allows businesses to train people receiving unemployment benefits for a number of weeks without having to pay them. Republicans had pushed for a permanent program along these lines. Democrats, led by President Barack Obama, held to their preferred policy. In addition, Democrats were able to beat back efforts to make unemployment recipients pursue a GED or undergo drug testing.
The Republican aide familiar with the deal said, “Those receiving unemployment benefits must be searching for a job,” and that states that currently “drug-screen workers seeking a job that requires a drug test” will be allowed to continue doing so. In other words: federal lawmakers allowed for a continuation of state laws.
So Republicans can keep a fig leaf on the drug testing bit, which is just an extension of current law. The “Georgia Works” program, basically a free internship for companies, isn’t made permanent, which is good. We’ll have to see if that actually gets implemented everywhere.
The real issue here is the loss of benefit weeks. When Michigan fell out of its extended benefits program a couple weeks ago, 32,000 people lost benefits. I’d like to see an estimate from the National Employment Law Project about how these cuts will affect the whole nation.