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With no payroll tax deal, unemployment benefits also at risk

2011 has been a year where Congress faced many challenges in reaching compromise. Will that trend continue into this next election year?

Jeremy Hobson: Well to paraphrase 19th century poetry: 'twas the week before Christmas, when all through the House, not a creature was stirring...

I'm talking about the House of Representatives, where most lawmakers have gone home for the holidays after leaving a legislative mess in their wake. House Republicans yesterday rejected a Senate deal to extend payroll tax relief through February for 160 million American workers. And if Congress can't get its lines uncrossed and get to a "yes" vote in both chambers, there's more at stake than just taxes.

Marketplace's Mitchell Hartman explains.


Mitchell Hartman: An extension of federal benefits for the long-term unemployed is tied to extending the payroll tax cut. It’s the ninth time since the recession began that Congress has gone to the brink on keeping those checks flowing.

If it can’t make a deal this time around, nearly two million people will fall off the rolls by the end of January, says George Wentworth of the National Employment Law Project.

George Wentworth: The average amount of an unemployment check is $295 a week. The Economic Policy Institute estimated that reauthorizing the federal programs would actually save or create over half a million jobs.

That’s because unemployment payments flow back into the local economy right away -- for rent, gas, groceries. But they also cost a lot -- $44 billion next year -- which is why Congressional Republicans want the cost offset by other spending cuts.

Meanwhile, another cut kicks in on January 1 if Congress doesn’t act. Doctors will see their Medicare reimbursement rates slashed by more than 25 percent.

I’m Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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