70,000 Long-Term Unemployed to Lose Benefits
May 30, 2012 • 9:29AM

70,000 long-term unemployed are set to lose benefits at the end of June. This comes as a result of a "compromise" in February, in which Congress agreed to continue the funding for extended benefits, but at the same time to cut their duration from 99 to 79 weeks. Through deals such as this, government expenditures for unemployment benefits have been cut by $52 billion (almost 30%), from their height of $157 billion (annual rate) in 2008, to $105 billion today.

Eight states have already cut benefits this month, with 95,000 losing benefits in California alone, and other states making additional cuts. An article in today's New York Times highlights how Florida is raising the bar for initial qualification, the portion which is paid for by corporate taxes, and requiring applicants to complete a "job skills" test and file online, instead of by phone, thus "saving" the state $2.7 million. Thus, denials for aid have soared to over 50%, when the national average is 30%. Additional coverage by the newspaper USA Today notes that "tough" welfare restrictions since 1997 have kept the welfare population relatively constant, in contrast to unemployment or food stamps, which have jumped by almost 50% in the last three years.

At the time of the Congressional "compromise" in February, Democrats contended that to cut off extended benefits to the long-term unemployed would be to create a "fiscal cliff," since almost all unemployment aid is immediately spent on real economic activity (gas, food and rent), the loss of which could collapse the country into "another" recession. Despite the passage of the February extension (one of the great legislative "victories" claimed by President Obama and his sycophants during this year), the cut in benefits has occurred anyway, by other means.