Putting the Squeeze on Jobless Benefits

In December, President Obama cut a painful deal, stomaching an extension of the Bush tax cuts for the richest Americans in exchange for keeping federally extended benefits in place for the remainder of the year.

Despite that deal, in the past month or so, a number of lawmakers have started to whittle benefits back. In March, Michigan became the first state to take an axe to its standard unemployment benefits, even though the state boasts one of the worst labor markets in the nation. For all the other states cutting back, the issue is inaction, rather than fiscal pressure. Some states needed to make a certain simple legislative fix to ensure that the federal government kept on kicking in its share of weeks of benefits—weeks of benefits already budgeted and paid for in Washington. A number of states failed to do so. So, on April 16, North Carolina, Tennessee, and Wisconsin all lost 20 weeks of federal benefits, effective immediately. Missouri did on April 2 as well.

On top of that, this week, House Republicans introduced a bill that effectively encourages states to whittle back their unemployment insurance systems. The legislation—written by Rep. Dave Camp (Mich.), the head of the Ways and Means Committee—gives states the option of using federal unemployment-benefit dollars for other job creation programs. ("Job creation" is defined broadly, so that repaying federal loans or providing tax breaks to businesses counts.) If some states, perhaps following Michigan's example, cut benefits and use federal dollars to repay loans rather than provide weeks of aid, it could take billions from jobless Americans' pockets.