The House's Dangerous Game of Chicken on Jobless Benefits

The House of Representatives failed to pass a crucial bill extending jobless benefits this afternoon. The inability of the chamber to move the legislation could have serious effects on the economy and is a bad omen for Congress's capacity to get things done—both during the lame-duck session and in the 112th congress.

As Politico reports, the bill gained a sizable majority of representatives—258, including 21 Republicans. But because it was fast-tracked through the chamber, it required a two-thirds majority, which would have been 275. Twenty-two representatives abstained, including seven Democrats.

As I wrote earlier this week, everyone basically agrees that extending jobless benefits is a good idea, with the exception of some of the farther-right-wing members of the Republican Party. That's because putting money into the pockets of the unemployed lets them spend, and the money they put into the private sector helps keep the economy growing.

The minimum length of unemployment benefits is 26 weeks, but with additional federal dollars, states will extend them up to 99 weeks. Congress has extended benefits several times, but the last extension is slated to expire at the end of November. If it does expire, that will cut off cash for about 4 million Americans.

The partisan divide here, apparently worth 17 votes or so, is over how to pay for the extension. Many Republicans and some moderate Democrats insist that the $12.5 billion cost of the extension ought to be offset by budget cuts elsewhere.

But this is one area on which it might not be worth standing on principle. The cost, after all, is small in comparison with just about any other federal budget item—and in comparison with the earlier $34 billion, six-month extension. And according to the CBO (PDF; see numbered page 18), unemployment benefits are by far one of the most effective engines of job creation. The CBO also says that without extensions in 2009, the poverty rate might be 15.4 percent, more than a full point higher than it is.

Worse, Politico reports that with a crowded agenda for the remainder of its session, Congress may not have the time to return to a benefits extension before the expiration. Bloomberg News reported that some economists estimate not passing an extension might result in the economy growing 0.4 percent less between December and February, a significant bite when GDP growth has been hovering in the anemic 2 percent rage. The 154 members who voted against the extension may find their principles are very costly indeed—far more than the $12.5 billion their yea votes would have cost.