TWO MILLION MAY LOSE UNEMPLOYMENT BENEFITS AT END OF YEAR
More than two million Americans will lose their unemployment benefits at the end of the year if Congress is not able to avoid the “fiscal cliff”.
The fiscal cliff is a set of deficit reduction measures adopted by Congress that automatically go into effect at the end of the year unless Congress can agree on different measures. About 40 percent of Americans receiving unemployment benefits get them because of a federal program used to supplement the state unemployment benefit programs which are funded by payroll taxes on employers and employees. This federal program will be cut if Congress doesn’t act.
The loss of these benefits would hurt not only the recipients but also the economy as a whole. Without unemployment benefits, families will be less able to purchase food, fuel, and other goods and services which purchases are needed to reinvigorate the economy. Although some economists argue that extended unemployment benefits disincentivizes workers from taking jobs for which they feel they are overqualified and therefore hurts the economy, most argue that unemployment benefits are an important part of the safety net and a cost effective way for the government to improve the economy. Hopefully, Congress will find a way to solve the gridlock that is endangering this important benefit.