Q: What is 2,502,000, and why are the unemployed so furious?

From the Wall Street Journal | July 17, 2010

2,502,000: The number of jobless people who have
lost access to unemployment benefits since June 2.

The Senate is expected next week to vote to extend unemployment
benefits, but the delay has caused a lapse in benefits for some 2.5
million of the nation’s jobless.

Earlier this year, Congress approved up to 99 weeks of unemployment
benefits backed by the federal government — an addition of 73 weeks to
the traditional 26 offered by the states. The duration of benefits
varies from state-to-state, and pending legislation doesn’t extend the
maximum beyond 99 weeks. It would have allowed those unemployed beyond
26 weeks to continue accessing the current program through the remainder
of 2010. The previous extension expired on June 2.

A recent analysis by Goldman Sachs economist Alec
Phillips showed that reducing unemployment benefits now would
be the earliest a federal extension was cut off. In earlier recessions,
the government extended benefits an average of 23 months after the peak
unemployment rate was hit. The peak jobless rate in the current downturn
was 10.1% in October, just eight months ago.

The House of Representatives passed legislation including a benefit
extension in May, but Democrats in the Senate have been unable garner
the 60 votes necessary to break a Republican-led filibuster. Many
Republicans support extending benefits, but object to the proposal’s
addition to the deficit. On Friday, a
successor was named for the late Sen. Robert Byrd.
West Virginia’s Carte Goodwin is expected to provide
the 60th vote for passing the unemployment extension when he is sworn in
on Tuesday.

As the partisan gridlock kept the Senate from acting, some $2.76
billion in payments to the unemployed were held back. The legislation is
likely to include retroactive payments, but that is little relief for
many of the jobless who needed the money immediately.

Jobless benefits also provide one of the best sources of government
stimulus, since nearly all of the payouts are spent quickly. To be sure,
the $2.76 billion is little more than a rounding error in an economy
that saw consumers spend $9.235 trillion last year. But it’s also just a
tiny fraction of a $3.552 trillion 2010 federal budget.

Though the arguments in the Senate focused on the effects on the
deficit, there has also been a
debate over whether extending benefits discourage the unemployed
from looking for work. An April
paper by Federal Reserve Bank of San Francisco
economists Rob Valletta and Katherine Kuang
found that though extended benefits do increase duration of
unemployment, the effect in the current downturn “appears quite small.”