What will bozo Biden do?...The Virus Is Surging. Growth Is Slowing. And Millions Are About to Lose Jobless Benefits.

https://www.barrons.com/articles/the-virus-is-surging-growth-is-slowing-
and-millions-are-about-to-lose-jobless-benefits-51605902401

The Cares Act was a gamble that the coronavirus would be eliminated 
quickly. That was a bad bet, and Americans are set to pay the price for it 
once again.

Unless lawmakers pass a new relief measure soon, millions of workers will 
stop getting jobless benefits in just five weeks when pandemic-era 
emergency programs expire. The pain won’t be limited to the unemployed, 
but will reverberate across the economy, hitting everything from consumer 
spending to businesses’ profitability.

The basic problem is that America’s unemployment insurance system isn’t 
designed to deal with economic downturns—and the programs created in the 
Cares Act weren’t designed to last long enough to deal with a world where 
the virus is surging, growth is slowing, and wide distribution of a 
vaccine is still months away.

States and territories offer only 12 to 26 weeks of benefits, with the 
possibility of up to 20 additional weeks when the local jobless rate is 
high. That’s plenty of time to find a new job—or move to a new city—when 
the national economy is doing well. But it often takes years before a 
decent job market returns after a downturn hits. That’s why Congress 
created programs during recessions in 1982-85, in 1991-94, in 2002-04, and 
in 2008-13 to provide extended benefits for people who couldn’t find jobs 
through no fault of their own.

There’s no indication the rebound this time will be much faster. Despite 
expressing optimism about the rapidity of the recovery going into next 
year, Goldman Sachs analysts nevertheless expect that America will only 
“reach full employment by 2024.” While many of those who lost work in 
March and April have since been rehired, millions of others haven’t, at 
least not into stable employment.

Economists at the University of California’s California Policy Lab 
estimate that 80% of initial jobless claims in the state, which is likely 
representative of the country as a whole, now come from people who already 
had been unemployed at least once this year. By contrast, the number of 
people who are filing each week for the first time this year is now back 
to prepandemic levels.

The failure of the recovery to reach large swaths of the workforce 
explains why the number of Americans receiving Pandemic Emergency 
Unemployment Compensation, or PEUC, has soared to more than four million 
by the end of October from under one million in July, while the number 
receiving normal extended benefits has jumped to more than 600,000 by the 
end of October from 2,000 at the end of June. After all, someone who lost 
her job in the middle of March had already hit the 26-week mark in the 
middle of September.

Emergency Surge
More than five million Americans have exhausted regular unemployment 
insuranceprograms and are now reliant on extended benefits that will soon 
expire.
Americans receiving extended unemployment benefits (excluding PUA)
Source: U.S. Employment & Training Administration; Barron's calculations
.million
1987
'90
'95
2000
'05
'10
'15
'20
0
2
4
6
But the PEUC adds only 13 weeks to normal state programs. Pandemic 
Unemployment Assistance, which was created to help freelancers, 
contractors, and other workers who aren’t traditionally covered by the 
unemployment insurance system, lasts only for 39 to 46 weeks. Moreover, 
both programs are set to expire completely “on or before December 31, 
2020,” which in most states means Dec. 26.

A new study by Andrew Stettner and Elizabeth Pancotti for the Century 
Foundation, a think tank, estimates that roughly 3.5 million Americans are 
set to exhaust PEUC over the next few weeks, with an additional 4.7 
million at risk of prematurely losing income support thanks to the hard 
calendar cutoff. On top of that, as many as 8.3 million Americans—although 
the exact number is probably closer to five million after accounting for 
the way the federal government treats state-level processing backlogs—will 
lose access to PUA, with most getting hit by the end-of-year deadline.

About 2.5 million of the eight million people losing PEUC benefits may 
still be able to get regular extended benefits, but even those probably 
won’t last long enough to tide workers over until a vaccine gets the 
economy back to normal. The California Policy Lab study expects a wave of 
benefit exhaustions in May and June, with 390,000 Californians alone 
losing benefits in those months absent congressional action.

The sudden reduction in support payments would eventually lead to lower 
spending on goods and services, which means less revenue for businesses 
and incomes for workers—and a slower and weaker recovery than there needs 
to be. Recognizing this problem, the bipartisan Economic Strategy Group at 
the Aspen Institute policy think tank urged Congress to provide 
“additional fiscal relief as quickly as possible…including extended 
federal government income relief to unemployed individuals.”

The need for fiscal action is all the more urgent given Treasury Secretary 
Steven Mnuchin’s move late Thursday to close five of the Federal Reserve’s 
pandemic credit facilities—including the entire Main Street Lending 
program and the Municipal Liquidity Facility—at year’s end and seize money 
from the Fed that had been appropriated to support emergency lending.

Running Out
Federal assistance to state-level unemployment insurance systems has 
stopped.
Weekly federal government spending
Source: U.S. Treasury; Barron's calculations
.billion
Unemploymentinsurance
FEMA lost wagessupplement
Jan. 2020
Feb.
March
April
May
June
July
Aug.
Sept.
Oct.
Nov.
0
5
10
15
20
25
$30
Unfortunately, a deal to help the jobless or preserve the Fed’s credit 
facilities before the December deadline isn’t likely. Negotiators in 
Congress and the White House have repeatedly failed to reach a deal, and 
it’s not clear why this time would be any different. A new Congress and a 
new president at the end of January may change the dynamic, but until 
then, millions of Americans without work will soon be without income as 
well.

Write to Matthew C. Klein at [email protected]



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Under Barack Obama's leadership, the United States of America became the 
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President Trump boosted the economy, reduced illegal invasions, appointed 
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