Unemployment Rate Set To Plunge As Bill To Restore Jobless Benefits Fails To Pass Senate

Tyler Durden's picture

Following last week's surprising passage of the preliminary approval to extend emergency unemployment claims, i.e. emergency jobless claims, for 3 months, when six republicans sided with democrats and gave approval to the original $6.4 billion legislation, there was an expectation that up to 1.4 million Americans would get their benefits extended once again (despite the so-called recovery in the economy, and the job market, instead of just all time high S&P500). Moments ago such hopes were dashed, when a Senate plan to restore long-term jobless benefits hit a wall Tuesday after Republicans withdrew their support amid complaints over cost and other issues.

The $18 billion bill, which would restore the benefits through the end of 2014, failed to clear a key test vote. Senate Majority Leader Harry Reid needed to attract 60 senators to move the bill forward, but the bill stalled on a 52-48 vote.

 

No Republicans voted in favor.

What happened between then and now, and why did those republicans revert back to the party line?

Reid lost their support when he amended the bill and failed to come up with a plan to offset the cost within 10 years.

 

"It doesn't look good," Maine GOP Sen. Susan Collins said before the vote and after a meeting with Reid.

 

Collins and Nevada GOP Sen. Dean Heller unsuccessfully proposed that Reid go back to the three-month extension. "We're back to ground zero," Heller said.

 

The senators are expected to return to the negotiating table. The GOP-controlled House has yet to vote on extending the benefits.

 

Reid postponed a prior vote Monday night upon realizing he didn't have enough support and said he needed time to talk with members of both parties.

It almost makes one wonder if Reid isn't trying to sabotage his own legislation. Whatever the answer, it increasingly seems that no law, retroactive or otherwise, will pass before the end of the month, which also means that up to (a record) 1.4 million Americans will fall out of the labor force, in addition to the now traditional 200K-600K people who quietly exit the labor pool every month. Which also means that, as we explained previously, since the impact on the unemployment rate could be as high as 0.8% from just the EUC expiration alone, that the unemployment rate for January could crash to under 6% just as the economy is starting to really backslide, as shown by the recent horrendous data from retailers across the board.