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This week’s headlines from Washington have focused on an end of year budget deal that would avoid a federal government shutdown and the expiration of a temporary reduction in workers’ Social Security payroll deductions. Two important issues, to be sure, but left somewhere in the dust is another and arguably more important issue – the expiration of unemployment benefits for long-term unemployed workers.
Last December, as part of a deal to extend the Bush era tax credits, the Obama Administration and Congress agreed to temporarily reduce employee Social Security contributions from 6.2 percent of their wages to 4.2 percent. The agreement also extended federal unemployment benefits for those who have been out of work long enough to exhaust their regular unemployment coverage. Both the payroll deduction and the extended unemployment benefits are set to expire at midnight on December 31, 2011.
But while expiration of the payroll deduction has received mega-media coverage this week, unemployment benefits have gone largely undiscussed, even in stories about legislative proposals that address both issues.
This is perplexing. While the payroll deduction may be stimulating the economy, expert opinion on the actual economic impact of the rollback is divided. Furthermore, as my colleague Mattea Kramer wrote recently, there are concerns about the impact of the payroll deduction on Social Security’s long-term economic health. Most importantly, the people who benefit from the deduction rollback do so because they already have jobs.
So where’s the media on this? The talking points coming out of Congress and the White House are focused on payroll taxes, and the media seems to be following their lead. But according to the National Employment Law Project, in January alone, 1.8 million workers who currently receive extended unemployment benefits or would have begun to do so will be cut off if Congress does not continue the program.
Unlike the payroll deduction holiday, unemployment insurance is a safety net program. And as far as economic stimulus goes, experts are agreed – the overwhelming majority of people receiving unemployment benefits spend them immediately.