With the recession much deeper than expected, cuts in unemployment insurance voted by Congress last year will cost jobless workers $10.5 billion in lost benefits over the next three years, triple the amount projected during the legislative debate, according to the Congressional Budget Office.
The 1981 legislation substantially reduced eligibility for benefits, and now that unemployment is higher than had been anticipated the cuts are having a wider impact than forecast. Fewer workers will get benefits than would have been the case under prior law.
Thus last year, when Congress approved President Reagan's proposals to slash unemployment insurance benefits, it acted on the assumption that the Reagan cuts would reduce benefits by $1.6 billion in fiscal 1982, $951 million in 1983 and $851 million in 1984, as compared with prior law, a three-year total of $3.4 billion.
However, new CBO estimates published this week by the House Ways and Means Committee put the 1982 loss to jobless workers under the new law at $2.4 billion, the 1983 loss at $4.3 billion and the 1984 reduction at $3.8 billion.
When the 1981 reconciliation bill was enacted, the CBO assumed that unemployment would be 7.2 percent in calendar 1982, 6.6 percent in 1983 and 6.4 percent in 1984. Those assumptions were supplied by the administration and used by Congress in passing its budget resolutions.
The newest estimates are based on more pessimistic unemployment predictions drawn up by CBO: 8.9 percent in 1982, 8 percent in 1983 and 7.4 percent in 1984.
The CBO estimated that, even with the cuts, the rise in unemployment will push benefits up substantially, to $24.3 billion this year and almost as much annually for the next two fiscal years.
But it calculated that they would have gone up an additional $10.5 billion through 1984 except for the cuts voted last year