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Saturday, October 03, 2009

On Extending the Safety Net

by Calculated Risk on 10/03/2009 08:00:00 PM


  • Extend Unemployment benefits.

  • Extend enhanced unemployment benefit (extra $25-a-week)

  • Extend the COBRA premium reduction (pay 65% of health insurance).

  • Extend "first-time" homebuyer tax credit (very inefficient).

    If this is just a safety net extension, then the "first-time" homebuyer tax credit doesn't qualify. And if this is the "Next Stimulus Package", providing more aid to the unemployed (13 weeks won't last long), or aid to the states, would be a far more effective use of money than the homebuyer tax credit ...

    A couple of stories, first from the WSJ: Democrats Weigh Extending Key Parts of Stimulus
    Obama administration economists said they would like the enhanced unemployment-insurance program to extend beyond its Dec. 31 expiration date. They also want to maintain a program that offers tax credits to pay 65% of the cost of health insurance policies under the COBRA program, which allows laid-off workers to purchase the health plans they had through their previous employer.

    White House officials said they also are examining whether to extend a soon-to-expire tax credit for first-time homebuyers, but that provision faces a stiffer headwind.
    From the NY Times: After More Job Losses, Democrats Move to Extend Benefits
    The House on Friday approved legislation that would provide 13 more weeks of benefits to states with unemployment rates of 8.5 percent or higher. Democratic leaders in the Senate are pushing a measure that would also provide aid to states that do not meet the threshold.

    Senator Harry Reid of Nevada, the majority leader, is promoting legislation that would provide four more weeks of unemployment coverage to all states, while states over the 8.5 percent threshold would get 12 more weeks.

    Lawrence H. Summers, director of the National Economic Council, said in an interview with The Atlantic online that the administration should “continue to support people who are in need, whether it’s unemployment insurance, or the Cobra program,” which provides health insurance for the unemployed.