One of the few things keeping this tottering recovery on its feet has been “automatic stabilizers,” things like food stamps and unemployment benefits which automatically distribute purchasing power downward when recession hits.
But as Danny Vinik points out, Congress is about to try and sweep the recovery’s legs, again, by savagely slashing unemployment benefits:
Come January 1st, 1.3 million Americans will lose their unemployment benefits unless Congress passes a law extending them. Throughout 2014, an additional 850,000 people will lose their benefits as well.
In normal times, unemployment benefits last a maximum of 26 weeks, but Congress passed an “emergency” provision – known as the In normal times, unemployment benefits last a maximum of 26 weeks, but Congress passed an “emergency” provision – known as the Emergency Unemployment Compensation (EUC) – in 2008 that extended benefits up to 99 weeks. The goal of this was to provide a greater cushion for the millions of workers who lost their jobs during the Great Recession.
If they had their druthers, Democrats would probably keep these going. But Republicans like Paul Ryan think the problem with the poor is not enough starvation-induced hallucinations, and Democrats’ willingness to fight on this one seems tepid at best.
So, probably, there goes yet another melon-baller scoop out of aggregate demand, and another few hundred thousand jobs over the next year or so. And people wonder why Congress’s approval rating is currently in the single digits.