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Lawmakers question whether jobless benefits are new welfare

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While Congress struggles to avert the "fiscal cliff," a second battle is brewing on Capitol Hill over whether to extend federal unemployment benefits for more than 2 million Americans that are set to expire in less than three weeks.

Congress has extended the benefits six times since the recession hit in 2008, but each renewal brought increasing skepticism from Republicans who say providing benefits to people for as long as 99 weeks has encouraged some to quit looking for work. Unemployment insurance, which usually only last 26 weeks, has become a welfare program of sorts and shouldn't be extended, they said.

"I would be highly reluctant to do another extension," said Sen. Ron Johnson, a Republican from Wisconsin, where the unemployment rate is nearly 7 percent.

The growing Republican opposition will likely complicate current negotiations between the White House and Congress over a deficit-reduction deal because Democrats are insisting that any deal include an extension of jobless benefits at a cost of $30 billion.

Some moderate Democrats, including outgoing Sen. Ben Nelson, D-Neb., have doubts of their own about whether to extend the benefits again. But the majority of Democrats say the extension would help invigorate the economy by giving people more money to spend and are preparing to portray Republicans as a party more concerned about the rich than the middle class.

"People aren't choosing to be unemployed," Sen. Sherrod Brown, D-Ohio, told The Washington Examiner. "There are a few that perhaps game the system, but my colleagues spend too much time at country clubs and not enough time talking to unemployed workers."

At the heart of GOP opposition is the belief that unemployment insurance benefits effectively give the jobless and incentive not to seek work.

It's a fear backed up by research, though many who have studied the issue say the effect is not as profound as Republicans fear.

A Congressional Budget Office report issued last month said extension of federal unemployment benefits would actually create 300,000 new jobs by increasing consumer spending for the short term.

But the CBO also concluded that extended unemployment benefits "provide incentives for ... recipients to remain unemployed longer than they otherwise would have because [the] benefits stop when recipients find a job or stop looking for work."

Johnson on Tuesday provided anecdotal evidence that the benefits are keeping the jobless rate higher in his home state of Wisconsin. He tells the story of a paint store owner who couldn't find workers, claiming he was turned down by prospective employees who preferred to run out the remaining weeks of their unemployment benefits.

"We are paying people not to work," Johnson said.

University of California, Berkeley economist Jesse Rothstein conducted a study on the impact of extended unemployment insurance on the jobless rate. He concluded the lengthened benefits raised the rate by just a fraction, with an average of 300,000 people staying unemployed longer.

"It makes not working more attractive," he acknowledged, but only for a relative few. On average, he said, unemployment benefits amount to about 40 percent of what many people could earn by working.

sferrechio@washingtonexaminer.com

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