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Senators close in on way to pay for unemployment benefits

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Senate Democrats are closing in on an agreement to pay for an 11-month extension of unemployment benefits with spending cuts that would not go into effect for at least a decade, sources tell me. This would probably be acceptable to liberals, because it would sustain a lifeline for the jobless right now, while pushing off any damage the “pay for” would do deep into the future.

The upshot would be that the extension of benefits would help the economy now, and the vast majority of the cuts to pay for it would not undermine the economy during the currently fragile recovery.

The deal would cost $17 billion or $18 billion, sources say, and would extend unemployment benefits through November 15th, and would be retroactive to December — making this nearly a year-long extension. It would be paid for by extending the mandatory cuts in the sequester for an additional year, but at the back end, which is to say, in 2024 — mostly Medicare provider cuts.

Extending these cuts by a year would in effect build on the temporary sequester replacement deal Congress recently passed, because that deal extended mandatory sequester cuts for two years later to pay for discretionary sequester relief in 2014 and 2015. The new “pay for” for unemployment benefits would simply extend those mandatory cuts another year much later.

The deal is being negotiated by Dem leaders Harry Reid and Patty Murray, and Dem Senator Jack Reed and GOP Senator Dean Heller — both of whom were key to shepherding the three month unemployment benefits bill that recently passed cloture in the Senate.

It’s unclear whether other Senate Republicans have been approached with the idea. But the immediate goal for Democrats is to figure out a way to hold on to the six Republican Senators who defected from the GOP leadership and supported cloture for the three month extension. They have insisted their support was only to proceed to consideration of an extension, and have demanded a pay-for in exchange for their final backing — so the current pay-for being eyed should presumably be something they might support.

After all, many Senate and House Republicans already supported extending mandatory sequester cuts at the back end as a method for paying for short term relief, when they voted for the sequester replacement deal. So they should be able to support the same mechanism now to fund an extension of unemployment benefits — theoretically, at least.

And so, if such a plan were to pass the Senate, it would increase pressure on House Republicans to act. Since they’ve already supported this pay-for mechanism in the past, any opposition to using it to fund a UI extension could reveal them to be ideologically opposed to any UI extension under any circumstances.


UPDATE: The Associated Press has additional details:

The expired law provided a maximum of 47 weeks of payments after an unemployed worker has exhausted state-funded benefits, usually 26 weeks.


The new measure would reduce the 47 weeks to a maximum of 31 weeks, officials said, based on a sliding scale that dates to the expired program.


Officials said the first tier of additional benefits would be six weeks, and be generally available to all who have used up their state eligibility.


They said an additional six weeks would be available in states where unemployment is 6 percent or higher; an additional nine weeks in states with joblessness of 7 percent or higher; and 10 more in states where unemployment is 9 percent or more.


The cost would be offset in part by extending a previously-approved reduction in Medicare payments to providers, officials said, and in part by limiting or eliminating the ability of individuals on Social Security disability from also receiving unemployment benefits.

UPDATE II: In fairness, Republicans could argue that this isn’t the same policy that they supported when backing the two-year sequester replacement deal. The sequester deal was not exclusively paid for by cuts later; and the cuts that did come later were kept inside the 10-year window. By contrast, the new UI extension would be paid for by cuts after the 10-year window.