San Jose, CA – As Congress wrapped up its business for the holiday break, the Republican leadership sent a big lump of coal to millions of unemployed workers. By refusing to renew the federal extended unemployment benefits program, jobless workers whose six-month state unemployment benefits ran out after Dec. 21, 2003 will no longer be able to collect thirteen more weeks of unemployment benefits. This will affect about 90,000 workers each week.

Republicans defended this move by pointing to the rapid growth of the economy from July to September of 2003, when production grew at an 8.2% rate, the fastest in almost twenty years. But during that same three months, the economy only produced a total of 77,000 new jobs – when a typical recovery would produce almost ten times as many jobs. In November, the Department of Labor report on unemployment showed that more than 2 million people, or almost one out of every four unemployed, had been without work for six months or more, the highest fraction in more than twenty years. The unemployment rate, at 5.9%, was actually higher in November than it was when the extended unemployment benefit program was first passed in March 2002.

What is really behind the Republicans’ decision is their thinking that unemployment benefits keep people from taking the low-paying jobs. Republican Senator John Ensign of Nevada said, “The more generous the benefit, the easier you make it to stay on unemployment insurance, and the less incentive you have to actually go out and do what it takes to find a job.”

While the Republicans have to cut unemployment benefits in public, private businesses are evading their unemployment insurance taxes to the tune of hundreds of millions of dollars. Many employers are calling their workers ‘independent contractors’ to avoid unemployment insurance taxes, costing workers their benefits if they are laid off. Employer errors also led to underpayment of more than a billion dollars in benefits to jobless workers in 2002.

In the last two years, New York, Texas, Minnesota, Missouri, Illinois and North Carolina have been forced to borrow from the federal government when their state benefits funds ran out of money. Businesses have pushed for lower taxes, and now that the funds are running out of money, they want to cut unemployment benefits. Here in California, the state will have to borrow over a billion dollars to cover unemployment benefits in 2004. Business leaders are pushing to stop a $40 a week increase in benefits, which they say are too high, even though the average benefit is only $236 a week. While this is more than what most other states pay, California has one of the lowest benefits when compared to average wages (not to mention the cost of living).

The cuts in unemployment benefits are part of a larger plan to slash and privatize government services and the safety net. First came welfare ‘reform’ in 1996, and now the Medicare ‘reform’ which opens the door to privatization using the promise of expanding drug coverage. The Bush administration still wants to privatize social security, public education and the Post Office.

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