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Cost to Keep Unemployment Benefits Extended: $100 B

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By Minara El-Rahman on December 04, 2009 8:50 AM

It will cost the United States government approximately $100 billion dollars to keep unemployment benefits extended to the masses of unemployed Americans out there.

As we wrote about earlier in Law and Daily Life, the unemployment rate had reached 10.2% at the beginning of November 2009.

As a result of this news, President Obama signed a bill that would grant an extension of time on umemployment benefits. He released a statement that said that he hoped that the bill he signed "will help grow our economy, help create and save jobs, and help provide necessary relief to small businesses."

As we discussed presiously, without Congressional action to renew the unemployment benefits program, many who should benefit from the extension signed into law by Obama would see their benefits expire on January 1.

According to AP, the costs of another push to have unemployment benefits extended will reach $100 billion dollars. The estimated cost includes the costs of extending unemployment benefits through 2010 for those who have been unemployed for more than six months as well as costs to provide subsidies to assist in paying health insurance premiums.

These costs are in a sharp contrast to the unemployment rates two years ago. Back in 2007, the costs of unemployment benefits was only $43 billion dollars.

Democrats and economists agree that the unemployment benefits will aid in the national push for economic recovery. AP quotes Rep. Jim McDermott, D-Wash as saying, "This is the most effective way to get money into the economy. It's given to people who are simply out of money. They're spending it. They're not socking it away in a mattress somewhere."

Many economists agree with this idea. They say that it is one of the fastest and easiest ways to help the national economy.

Economists worry that cutting back on unemployment benefits could deepen the already severe wounds of the national economy. Mark Zandi, chief economist at Moody's Economy.com told AP that cutting these benefits could spell disaster: "It would significantly raise the risk of falling back into recession next year."

In the meantime, the push for extending unemployment benefits is getting attacked by Republicans.

AP quotes Minority Leader John Boehner, R-Ohio: "Calling more government spending and more debt a 'jobs package' is laughable, and the Democrats' frantic push for more of the same is yet another acknowledgment that their trillion-dollar stimulus isn't working." 

This is despite the fact that most Republicans supported the measure passed recently to have unemployment benefits extended a few weeks back. Many analysts predict that Republicans will deny this additional measure.

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