Maricopa will feel impact of federal benefits expiring

More than a thousand Maricopa residents could see their unemployment benefits canceled between now and Jan. 1, due to the federal government’s failure to extend benefits a sixth time.

Currently, in the city of Maricopa there are 2,545 resident who are unemployed, according to the Arizona Department of Economic Security.

However, DES spokesman Steve Meissner said that all unemployed people are not collecting unemployment benefits.

Statewide there are 295,000 unemployed people; of those unemployed only half were collecting benefits. If the same percentages holds true for Maricopa it would translate to about 1,270 residents collecting benefits.

The way benefits work in Arizona is that employers pay into a fund and those funds are then redistributed to the unemployed.

A person on unemployment can collect state benefits for a maximum of 26 weeks.

Of the 140,000 plus receiving unemployment benefits in Arizona, 86,000 have exhausted state benefits.

“Typically a person’s benefits would expire after 26 weeks, but in times of economic hardship the federal government has a history of stepping in and extending unemployment benefits,” Meissner said.

In July 2008, Congress began extending unemployment benefits, which can now last for up to a record 99 weeks: 26 weeks of regular benefits from the states, plus up to 73 weeks in federal aid in states with high unemployment rates. As of last week, Arizona and about half the other states offered the maximum 99 weeks of benefits.

However, Congress failed to pass a sixth extension this past Tuesday, Nov. 30 that would have extended benefits through  February. That failure began the phase out of benefits for two million people across the country.

Miesnar predicted by the year’s end 51,700 Arizona residents will see their benefits expire.

“The expiration date of peoples benefits is complicated because there are different levels of benefits,” Miesnar said. “We are sending out seven different letters explaining the expiration of benefits.”

Although extended benefits lapsed Wednesday, several news agencies are reporting that a new push to extend them could be part of a tax cut compromise.

The Huffington Post reports that President Barack Obama suggested Tuesday that a group of congressional leaders he has asked to work out a compromise on expiring tax cuts will also try to work out a compromise on expiring unemployment benefits.

“We discussed working together to keep the government running this year, and running in a fiscally responsible way,” Obama said. “And we discussed unemployment insurance, which expires today. I’ve asked that Congress act to extend this emergency relief without delay to folks who are facing tough times by no fault of their own.”

NBC -TV’s Today show also reported Wednesday morning that unemployment insurance could be an element of the tax cut compromise between Republicans and Democrats in Congress.

Andrew Stettner, deputy director of the National Employment Law Project, said he thinks there is a real chance Congress will again pass an extension. Congress has historically moved to extend unemployment “anytime unemployment has been this high. I think there’s a real chance cooler heads will prevail. There’s also a real chance of a Washington failure. But it’s by no means over.”

However, Miesner is not so positive.

“In the past when benefits have expired, we have encouraged people to keep applying in hopes of the benefits being extended and them receiving retroactive payments,” he said.

“This time we are not giving any assurances benefits will be extended and are not advising people to continually apply.”

Ripple effect

It is not just those who receive benefits who will fill the pinch of the expiration.

According to Senior Economist for Elliott D. Pollack and Co. Jim Rounds the ending of these benefits could create a small damper on the economy.

“Typically people who receive benefits are struggling to get by and any money they receive they are going to spend on basic needs,” he said. “These people are circulating these dollars in the economy not saving them.”

The Congressional Budget Office found that every $1 spent on unemployment benefits generates up to $1.90 in economic growth. The program is the most effective government policy for generating growth among 11 options the CBO has analyzed.

“In the case of tax cuts for the higher income I am not as convinced it is a good idea,” said Rounds. “But extending these benefits is something I believe should be done. It is not only about the economy, but also about helping people who are struggling