House Passes 13-Week Unemployment Insurance Extension

September 23, 2009 6:59 a.m. EST

Washington, D.C. (AHN) - The House late Tuesday approved a 13-week extension of jobless benefits in 27 states. The legislation now goes to the Senate, where it is not expected to face strong opposition.

The bill from Rep. Jim McDermott (D-WA) passed by a 331-83 vote. Seventeen Democrats joined 66 Republicans in opposing the measure, which will extend benefits in states where unemployment is more than 8.5 percent.

House Minority Leader Eric Boehner (R-OH) voted to pass the bill, but his fellow Republican leaders, Minority Whip Eric Cantor (R-VA) and Republican Study Committee Chairman Tom Price (R-GA), did not.

Democrats said the extension would "support the recovery at a critical turning point" because every dollar from unemployment benefits generates $1.63 in new economic demand.

Republicans had warned that the bill would extend benefits for a period totaling nearly two full years, giving credence to "the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would 'create undesirable incentives for individuals to delay returning to work. That would lower earnings and total spending.' "

The nation's unemployment rate rose unexpectedly from 9.4 percent in July to 9.7 percent last month. The economy shed 216,000 jobs in August, less than the revised 276,000 jobs the previous month, putting the total number of jobs lost since the recession began in December 2007 at 6.9 million.

The economic stimulus package signed in February by President Barack Obama raised unemployment benefits by $25. It also extended benefits by 20 weeks, and by 33 weeks in states with high unemployment rates.

A total of 12 million Americans have benefited from the additional $25, according to the Labor Department.

But 314,000 workers are expected to run out of unemployment insurance benefits by the end of this month, and more than a million will do so at the end of the year.

The new extension would cost $1.4 billion,according to estimates by the nonpartisan Congressional Budget Office.

McDermott said it will not add to the deficit because it will be completely offset by: a one-year extension of federal unemployment tax (FUTA), which the Bush administration had proposed extending last year; a reduction of unemployment insurance overpayment with new requirements for reporting of new employees.

If passed by the Senate, the extension will be implemented in the District of Columbia, Puerto Rico and 27 states: Alabama, Arizona, California, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, Mississippi, Missouri, Nevada, New Jersey, North Carolina, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Washington, West Virginia and Wisconsin.

States expected to reach 8.5 percent unemployment in a few weeks, such as Alaska (8.3 percent), Delaware (8.2 percent) and Minnesota (8.2 percent), may qualify for the extension.