Redirecting

Tuesday, December 07, 2010

No - People Are Not Collecting 13 More Months of Unemployment Benefits

So last night The President outlined the new "Framework Agreement" regarding tax policy and unemployment benefits extensions.   I want to talk specifically about the UI benefits, because it wasn't until 4pm today, after reading a post on Calculated Risk, that I understood what actually happened, and I do not think I'm alone here.  First, the words direct from Obama's mouth:

"Now, under this agreement, unemployment insurance will also be extended for another 13 months, which will be welcome relief for 2 million Americans who are facing the prospect of having this lifeline yanked away from them right in the middle of the holiday season."

Now, I read this as meaning that if I were collecting UI, and my benefits were set to expire, that this program would give me benefits for 13 more months.  (note: that's not correct! read on...)  The NY Times's reporting of the story was typical of everything I read today:

"In addition, the agreement provides for a 13-month extension of jobless aid for the long-term unemployed. Benefits have already started to run out for some people, and as many as seven million people would potentially lose assistance within the next year, officials said."

Right - again, this makes it sound like benefits will last for 13 more months - super long term UI benefits.  But then Bill @ Calculated Risk explained:

"Just to be clear, the "extension of the unemployment benefits" is an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits. There is no additional help for the so-called "99ers"."

and also:

"To repeat: this extension doesn't add additional weeks of benefits; it keeps the above structure in place for an additional 13 months."

Which got me wondering: how could everyone have misinterpreted this?  Maybe it wasn't everyone - maybe it was just me, who knows.

I have zero intention of debating (at least in this post) the policy of paying unemployment benefits for 26 weeks, 52 weeks, 99 weeks, or more - that's not the purpose of this post - I'm trying to understand/explain what The President was actually announcing, and, having seen the light, I'm pretty shocked that the democrats went for it (or will go for it).  I do think that there are a plethora of people out there who, like me, misinterpreted the debate itself, and that this results in anger for a lot of people who are against extending UI benefits, who say things like "99 weeks of UI is enough."  Turns out, no one was talking about giving more than 99 weeks of UI at all!

I was under the impression that in this partisan debate where the democrats wanted UI extended and the republicans wanted the Bush Tax cuts extended for the rich as well as everyone else - that the dems were fighting for more weeks of unemployment benefits.  In other words, for those people who had used their full (up to) 99 weeks, they'd get further UI benefits if the democrats got their wish.  Isn't that what everyone was talking about?  The "99'ers" who would soon fall off the benefit bandwagon?   It seemed that Obama's proposal was a win for everyone - as Felix Salmon called it - "Oprah Style" - "YOU get a tax cut - YOU get a tax cut - YOU get more benefits!"

However, the truth of the matter is that the "compromise" allows people receiving UI benefits who have not yet received their full 99 weeks to continue receiving benefits up to 99 weeks, while otherwise they would have been ineligible to move to the next tier of extended benefits.  Obviously, that's very different from another 13 months of benefits...

It's quite possible that I'm alone on the island here, and everyone else in the world understood this perfectly, but I doubt it - I'd be curious to know if my readers understood this already.  Perhaps my desire to stay out of partisan political debates left me in the dark here, unaware of what the true debate was.  

I want to mention one more thing here, from the White House's "Fact sheet" on the Framework Agreement.

The framework agreement extended unemployment benefits at their current level for 13 months, through the end of 2011. This will save millions of Americans searching for work from losing their unemployment benefits in the coming months and will help create hundreds of thousands of jobs.
  • In December alone, 2 million workers who would have lost benefits will continue to receive them because of this framework agreement. Over the next year, 7 million workers will no longer need to worry that their unemployment benefits could be eliminated as they search for jobs.
  •  According to the Council of Economic Advisers, passing this provision will create 600,000 jobs in 2011 alone.
Here we see the subtlety that the current level of benefits is being extended for 13 months - not that benefits are being extended for 13 months.  And I want to call The White House out on the "create 600k jobs in 2011 alone" claim. That's nonsense.  I read the Council of Economic Advisers' paper on the subject, and what it said is that if the extensions were not instituted, employment would decrease by 600k.  In other words, it might be correct to say that passing this provision will SAVE 600k jobs, but not that it will CREATE 600k jobs.  Is there a difference?  Yes - saving jobs keeps things from getting worse, while creating jobs makes things better.   

-KD

31 comments:

Bernie said...

I'm with you, I had thought the exact same thing until looking on calculated risk earlier today.

getyourselfconnected said...

I saw the 112 weeks on many headline banners this morning so I really had no idea until I looked at the actual release, but it was not worded very clearly. Still it served as a attention grabber!

Kid Dynamite said...

GYC - i put PLETHORA in this one for you!

IF said...

Same as you. CR is a hero.

Nemo said...

I just like how paying people not to work will decrease unemployment. Apparently.

Dis757 said...

I'll bet most of congress didn't understand what they voted for either!

Kid Dynamite said...

Dis - that's a great question... i wonder.

Nemo - yeah, the theory is, of course, that if Uncle Sam gives you benefits, you spend them and prevent someone ELSE from losing their job. again, SAVED vs CREATED

Hammer Player a.k.a Hoyazo said...

All the stuff about how any of these moves will "create jobs" is complete garbage of course. Just designed to make the current administration look good to the uninformed masses, and nothing more.

And yes, I too had understood the UI extension to mean going beyond 99 weeks, and I too looked into it and found it not to be the case. More deliberate mis-wording to make the uninformed masses think they are getting more than they actually are.

Apparently the push for re-election has already started at Chez Obama.

Transor Z said...

Posts like this are why serious bloggers like you perform such an important public service. It is such a chore for busy people to have to decipher official information that should be clear on its face.

But What do I Know? said...

You know, KD, a guy in my office was going on about how irresponsible it was to give lazy people another year of unemployment--and how fiscally irresponsible that was. I sent him the Calculated Risk post, and to his credit he thanked me and changed his tune. But how many other people out there will see the headlines and assume they're getting more dough, and be pissed off when they don't?

Also, I didn't read anywhere but on Prag Cap that the Making Work Pay credit was being ended. This has the net effect of balancing out the 2% payroll tax cut for singles up to $20K and marrieds up to $40K. With the median household income at somewhere around $45K if I understand rightly, at least half of the people are not really getting anything. But again, I didn't really see any commentary on that either.

Anonymous said...

Thx for this helpful post

StB said...

So it is an even bigger win for the Repubs. Interesting.

One would have thought the White House would have stopped making any claims about jobs being saved or created.

JayTrader said...

As Always...Great Post Kid!

Onlooker said...

I was in your shoes on this as well, KD. How could we not have misunderstood it, the way the media reported it, and the misleading words coming out of our president's mouth?

And the only place I saw a clear explanation of it was at CR. Although I'll admit that I didn't scour the mainstream media to try to find a better, more complete, explanation.

I'll bet there are some "99ers" out there that are getting whiplashed by this, eh? As usual, it's a convoluted mess of bureaucratic crap, courtesy of the guvmint.

Hammer Player a.k.a Hoyazo said...

Check it out, KD! From the homepage of Yahoo! Finance at 3pm ET on Wednesday:

http://finance.yahoo.com/news/Sorry-If-You-Have-Been-cnbc-3642584498.html?x=0&sec=topStories&pos=9&asset=&ccode=

But What do I Know? said...

Aw, Hammer Player beat me to it! Congrats Kid on contributing greatly to the discussion on this. . .

For an encore, O Mighty One, can you highlight how all the low wage earners are getting screwed by the switch from Making Work Pay credits to payroll tax deductions?

Kid Dynamite said...

sorry BWDIK - I'm not up on Making Work Pay

But What do I Know? said...

In a nutshell, MWP provides a tax credit equal to 6.2% of earned income (up to $400 for single and $800 for married filers). The tax deal proposes eliminating this and instead instituting a 2% SS payroll tax cut. The way I figure it, this is better for those earning more than $20K (single) or $40K (married) but worse for those making less than that (they would actually see a tax increase). And don't forget, the MWP is a credit that can actually turn into a refund for low wage earners, just like the Earned Income Credit.

In any case, the proposed deal would amount to a tax increase on low wage earners. This was certainly not elucidated by anyone in the MSM as far as I can see. I'm sure the Republicans don't care, but I can't figure out Obama's motivation in this--maybe he just couldn't do the math.

Anonymous said...

Soooo the president I voted for sold us, the 99ers, for 99c to the republicans...

Stephen said...

kid dynamite,
is there somewhere you can actually read the text of the "Framework agreement?" where are you seeing that the qualifying period was extended, not the amount of weeks someone would get? you certainly can't tell that from reading the white house's press release.

Kid Dynamite said...

stephen - no text yet. that's exactly the problem. the White House fact sheet almost hints at the truth though.

Stephen said...

i totally understand your point about the "extension of the unemployment benefits" meaning an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits. but where are you and calculated risk and others finding out the truth if nothing is written but that fact sheet?

Kid Dynamite said...

that's an excellent question, Stephen, and i think the answer comes from people who were involved in what the debate actually was - the public was confused about what was actually being argued. I couldn't believe CR was correct, but a number of other sources have told me that's exactly the case.

KH said...

Watching Fox News the last couple days it sure seems convenient the way that the hosts and guests don't seem to describe the unemployment provision in a way that makes it clear what it actually does. It's almost like they want people to misinterpret it or something...

Anonymous said...

obama said "for the hardest hit". which turns out to be a lie. Congress and the President should be adding more weeks for the hardest hit. Instead they are playing a propaganda word game on the people.

Anonymous said...

KD,

Will it "interfere" with weekly claims job, as 99wks expired mean less claim?

Kid Dynamite said...

anon - i'm not sure what you mean - it will be the same as it has been. the Extended Benefits have already been separated out on the claims numbers

Onlooker said...

anon

The weekly number we get on Thurs (which I assume you're referring to) is INITIAL claims, and so it's not relevant.

George said...

Great job digging out

"...what it said is that if the extensions were not instituted, employment would decrease by 600k."

Lies all over the place.

mjsflash said...

Given there is not drastic disparity among states this link should explain the main gist.

http://www.labor.state.ny.us/ui/claimantinfo/extendedbenefits.shtm

Anonymous said...

wait unitl after xmas all those seasonal jobs will be gone, Kd ty for this