Will there be an unemployment extension in 2013?
That’s the question that many Nevadan’s, and the unemployed in other hard hit states, are asking.
As it stands now, the last week payable for for any type of federal tiered extensions is 12-29-12.
Even if you are in midst of a tier, it ends on the week of 12-29-12.
Congress would have to approve any type of extension.
Right now, they are fighting it out.
There is a “fiscal cliff” stalemate going on with Democrats and Republican who, at this point, are unable to agree on anything.
And unemployment benefits are part of the fiscal cliff.
John Boehner, House of Representatives Speaker, has said Obama’s plan to raise taxes on the rich was the wrong approach saying,
There is a stalemate. Let’s not kid ourselves. Right now we are almost nowhere.
What does that mean about a potential unemployment extension?
The unemployment extension will be tucked into another change; like payroll taxes or tucked into the healthcare changes.
It’s all big business with, what is supposed to be, give and take on all sides.
Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts which will result in a 2% tax increase for workers, the ending of certain tax breaks for businesses, shifts in the alternative minimum tax, and the commencement of taxes related to Obamacare. Also, the spending cuts that were agreed upon as part of the debt ceiling deal of 2011 will go into effect. Barron’s says that over 1,000 government programs – including the defense budget and Medicare are in line for “deep, automatic cuts”.
A best case scenario is that it is all ironed our before the end of the year; worst case scenario is that both sides cannot come to terms, which may happen, and emergency stop gap measures will be temporarily be in place.
It seems likely that an extension of federal benefits will pass. There are still far too many out of work and study after study has shown that if unemployment is not approved for 2013, many families will be plunged into poverty.
Federally funded extended unemployment insurance (UI) benefits are set to expire at the end of this year. These benefits serve two very useful public purposes. Most obviously, they provide a lifeline to the long-term unemployed and their families during the deepest and longest economic downturn since the 1930s.Less understood but equally crucial, the UI benefit extensions boost spending in the economy and thereby create jobs. We find that continuing the extensions through 2013 would generate spending that would support 400,000 jobs. If this program is discontinued, the economy will lose these jobs.
With the economy still in shambles, it is likely that there will have to be some type of extension.
The real issue is the State Extended Benefits (SEB). SEB provides up to 20 weeks of unemployment after federal extensions have run out. In Nevada, for example, which has been very hard hit by the economy and still suffers from double digit unemployment, SEB ended in July of 2012, yet New York, which has single digit unemployment is eligible for SEB. Go Figure!
The formula used to calculate SEB measures unemployment uses the 3 month unemployment rate and compares it to the three prior years of the same months. If there is a 10% improvement, the state is cut off.
Back in June, Nevada’s current three-month average unemployment rate was 11.8 percent, and in order to meet the threshold for SEB, Nevada’s three-month average rate would have needed to be 12.0 percent or higher.
Obviously, the system needs to be overhauled, however that is unlikely to happen anytime soon.