First the unemployed
Benefits to the unemployed are the first victims of the lack of agreement
There is good and bad news regarding the fiscal cliff. The good news is that the fiscal cliff in reality is more a hillside than a cliff; the bad news is that we already started falling over the precipice.
Regardless of the result of ongoing conversations between the White House and Congress to reach an agreement on spending cuts and tax increases, tomorrow the Emergency Unemployment Compensation (EUC) is set to expire.
This benefit is included in the package of expiring programs being discussed, although it has never attracted as much attention as tax rates. Moreover, the thwarted Republican “Plan B” completely disregarded this aspect.
Several lawmakers oppose extending this benefit because they think it discourages job seekers. However, the EUC is playing an important role given the crisis.
Not reauthorizing the EUC will immediately impact 2.1 million unemployed; about 400,000 of them live in our state, according to the California Employment Development Department.
This is without a doubt a human problem for unemployed families who depend on that money to survive. At the same time, it is also detrimental to the economy.
The Congressional Budget Office estimated that reauthorizing the EUC for one year would increase the GDP almost 0.5% and stimulate the economy, since beneficiaries spend the money right away because they need to.
The ending of the EUC is serious in itself, but it is also a signal of what is to come if there is no bipartisan agreement. The looming crisis is a slippery slope that will progressively affect budgets and cuts, as time goes by, instead of being a fall down a cliff. But that does not make it any less serious.
That is why there is still hope that even after December 31, the effect of a lack of agreement can be reverted. Although for now, the unemployed are the first to fall off the cliff.
