WASHINGTON - More than one million Americans are bracing for a harrowing, post-Christmas jolt as extended federal unemployment benefits come to a sudden halt this weekend, with potentially significant implications for the recovering U.S. economy. A tense political battle likely looms when Congress reconvenes in the new, midterm election year.
For families dependent on cash assistance, the end of the federal government's "emergency unemployment compensation" will mean some difficult belt-tightening as enrollees lose their average monthly stipend of $1,166.
Jobless rates could drop, but analysts say the economy may suffer with less money for consumers to spend on everything from clothes to cars.
Having let the "emergency" program expire as part of a budget deal, it's unclear whether Congress has the appetite to start it anew.
An estimated 1.3 million people will be cut off when the federally funded unemployment payments end Saturday.
About 214,000 Californians will lose their payments, a figure expected to rise to more than a half-million by June, the Labor Department said. In the last 12 months, Californians received $4.5 billion in federal jobless benefits, much of it plowed back into the local economy.
More than 127,000 New Yorkers also will be cut off this weekend. In New Jersey, 11th among states in population, 79,000 people will immediately lose out.
Started under President George W. Bush, the benefits were designed as a cushion for the millions of U.S. citizens who lost their jobs in a recession and failed to find new ones while receiving state jobless benefits, which in most states expire after six months. Another 1.9 million people across the country are expected to exhaust their state benefits before the end of June.
Gene Sperling, the director of the White House's National Economic Council, said Friday that President Obama wants an extension as soon as Congress returns next month, warning the abrupt cut-off will deliver a blow to the U.S. economy.
"It defies economic sense, precedent and our values," Sperling said.
But Obama has no quick fix. He hailed this month's two-year budget agreement as a breakthrough of bipartisan cooperation while his administration works with Democratic allies in the House and Senate to revive an extension of jobless benefits for those unemployed more than six months.
The Obama administration says those payments have kept 11.4 million people out of poverty and benefited almost 17 million children. The cost of them since 2008 has totaled $225 billion.
At the depth of the recession, laid-off workers could qualify for up to 99 weeks of benefits, including the initial 26 weeks provided by states. The most recent extension allowed a total of up to 73 weeks, depending on the state.