TOPICS > Economy

Obama Expected to Sign Extended Unemployment Benefits, Homebuyer Credit

November 5, 2009 at 6:53 PM EDT
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The House voted overwhelmingly Thursday to extend aid to jobless workers and offer tax breaks to homebuyers. President Obama was expected to sign the measure on Friday. Ray Suarez reports.

JUDY WOODRUFF: That follows action in Congress to keep alive aid for the unemployed and tax breaks for homebuyers. Final action came today after weeks of delay.

Ray Suarez has our report.

RAY SUAREZ: Today’s action came in the face of daunting numbers, 7,000 Americans exhausting their unemployment benefits every day, and 15 million people out of work. The bill that won final approval in the House was the fourth extension of benefits since June of last year.

MAN: The gentleman from Washington.

Democrat Jim McDermott of Washington State said there was no choice, with the unemployment rate still rising.

REP. JIM MCDERMOTT, D-Wash.: We know it will take considerable time to restore those lost jobs. There are predictions that it will rise above 10 percent nationally, and will not come down until late in 2010. We must continue to provide the lifeline for the unemployed workers who have lost their jobs through no fault of their own and who are searching for new employment.

RAY SUAREZ: Nearly everyone in both parties accepted that logic. The vote was 403-12.

MAN: The Senate amendment is agreed to.

RAY SUAREZ: But Republicans like John Linder of Georgia also argued the Democrats’ stimulus program has failed.

REP. JOHN LINDER, R-Ga.: Another 263,000 jobs were eliminated in September, and the unemployment rose — rate rose to 9.8 percent. More jobs losses and higher unemployment are expected to be announced tomorrow. This and other Democrat legislation is perpetuating unemployment, not solving it.

Anxiety high for jobless Americans

Matthew McCaffery
I'm scared to death. It's very depressing.

RAY SUAREZ: The benefits extension bill had passed last night in the Senate...

WOMAN: The ayes are 98. The nays are zero.

RAY SUAREZ: ... where partisan wrangling held up action since September. The legislation will extend jobless payments nationwide by an additional 14 weeks. And in 27 states with jobless rates higher than 8.5 percent, the benefits are extended for a total of 20 weeks.

The additional aid will come just in time for thousands of Americans, like Matthew McCaffery, an out-of-work waiter in Washington. He said last month he had been looking for a job for more than a year.

MATTHEW MCCAFFERY: I got unemployment, and then Bush did the November extension. And, this year, with the stimulus, I have received two more extensions. Now, my unemployment runs out in five weeks. And I'm scared to death. It's very depressing. I try to get a job. But it's just critical. I will do anything. I can be a cashier, a maitre d' in a restaurant, you know, anything.

RAY SUAREZ: In the meantime, the number of Americans filing first-time claims for benefits fell last week, to the lowest level in 10 months. But there was every expectation that a government report tomorrow will show unemployment slightly higher, at just under 10 percent in October.

JOHN SILVIA, chief economist, Wells Fargo: Job growth will continue to be very, very slow.

RAY SUAREZ: In a further effort to boost growth, the newly adopted bill also extended an $8,000 tax credit for first-time homebuyers through next April. And the tax credit was expanded to give $6,500 to those who have lived in their current homes for five years to trade up to a new one.

President Obama is now expected to sign the $24 billion package as early as tomorrow.

For more about the benefits issue, we're joined by Christine Owens, executive director of the National Employment Law Project, a nonprofit center that works with the unemployed.

Well, Christine Owens, it's rare for a measure to pass with such lopsided margins...

RAY SUAREZ: ... in both the House and Senate, but let's take one step back. Was there controversy, resistance, much debate before these final votes?

Unemployment affecting basic needs

Christine Owens
National Employment Project
People who don't have unemployment benefits can't shop in their local communities, can't buy school supplies for their kids...can't pay their mortgages.

CHRISTINE OWENS: There was not a lot of controversy or -- or debate about the need to pass an extension of unemployment benefits.

There was an attempt to add extraneous amendments to this legislation. And that's what held it up for more than a month. It was introduced in the Senate a month ago. But the other amendments that there was an attempt to add and the filibuster, or -- or the need to get 60 votes to move ahead to vote on this is what held it up.

RAY SUAREZ: Hundreds of thousands are already out of benefits. Over a million more were facing the expiration in -- in coming weeks. What was the consequence -- what would be the consequences of not acting right now?

CHRISTINE OWENS: They would be huge. You know, we know that 40 percent of expenditures from unemployment benefits are to pay for mortgages. So, folks who are running out of unemployment benefits can't pay their mortgages.

We know that foreclosures now are largely because of unemployment, and not because of the -- the subprime crisis anymore. People who don't have unemployment benefits can't shop in their local communities, can't buy school supplies for their kids, can't meet their basic needs.

We know that, with unemployment benefits, people are half as likely to fall into poverty as they would be if they didn't have these benefits. So, the consequences for the individuals are huge, but the consequences for local economies are huge, too, because, when that spending dries up, these economies suffer.

RAY SUAREZ: Looking at the bill that's been passed, what does it do for people whose benefits have already expired? If you ran out in August or September, can you now go back for a 14-week extension?

CHRISTINE OWENS: You -- you can go back in, and it will start prospectively. You don't get payments retroactively for the period between when your benefits expired and when the president signs the bill, which we think will happen tomorrow.

But, then, prospectively, for folks who are still unemployed and have no benefits, they would be able to start collecting again.

People want to work

Christine Owens
National Employment Project
People want jobs, but there aren't jobs for the people who need them.

RAY SUAREZ: Now, William Beach at the Heritage Foundation spoke to the "NewsHour" earlier today. And he said that, while this was clearly a humanitarian impulse and politically popular, that handing out that money may also give people the wherewithal to delay reentering the work force, waiting for just the right job at just the right pay, instead of a job at any pay.

CHRISTINE OWENS: We have lost eight million jobs since this recession began. There are more than six unemployed workers for every single job opening. Even Alan Greenspan said a few years ago in the last recession that, in a situation like this, where there are not enough jobs for unemployed workers who need them, the notion that somehow providing benefits keeps people from looking for jobs just doesn't make any sense.

I mean, folks are looking for jobs. They want to work. Benefits are about $350 a week. They're not enough to support families on. People want jobs, but there aren't jobs for the people who need them. These benefits help those families and they help the communities and the economy.

RAY SUAREZ: The money for these extensions will be generated by taxing employers until June of 2011, when -- projections say, anyway -- we will be at least adding jobs or well in -- possibly well into a recovery.

Is that the best place to get the money, to burden employers with further taxes?

CHRISTINE OWENS: It is a very modest tax. It's been in existence since 19 -- the early 1980s. It's $14 per worker. So, it's not a huge cost to employers. This is something that workers work for and they earn from -- from their wages. It's the fair way to do it. And, so, yes, this is way to do it.

Jobless claims dropping

Christine Owens
National Employment Project
What it suggests is that the pace of job cuts has slowed...What it doesn't mean, however, is that unemployment itself is easing, because all of these new claims are on top of existing claims.

RAY SUAREZ: Today, the Labor Department announced that new jobless claims have dropped to their lowest level in 10 months, just over half-a-million new claims. What does that statistic tell you?

CHRISTINE OWENS: Well, that's still a high number of new claims, but what it suggests is that the pace of job cuts has slowed. And that's certainly a very good thing. And we would like to see that continue.

What it doesn't mean, however, is that unemployment itself is easing, because all of these new claims are on top of existing claims. We have nine million people who are collecting unemployment of some form or the other, and that's a record high.

We have 15.5 million people who are unemployed. That number is not likely to get any smaller for a number of months.

RAY SUAREZ: So, what's the rule of thumb? What's the number you're looking for to have a signal that we're finally adding jobs in this economy?

CHRISTINE OWENS: Well, we want to see these new claims drop well below 500,000 a week. That's -- 500,000 is considered a cutoff point in terms of the severity of -- of the economy. So, we want to see the new claims drop below 500,000 and to continue to decline.

And then we want to see -- in tomorrow's report, for example, we don't anticipate seeing jobs added, but we want to start seeing monthly employment reports in which we're no longer in the negative column, that we have new jobs that are being added to the economy.

RAY SUAREZ: Christine Owens, thanks a lot.