Dec. 22 (Bloomberg) -- After trying for two years to find work, John Reat says he’s renegotiating his mortgage and may have to tap his retirement savings next month if Congress doesn’t extend his unemployment benefits of $375 a week.
“I’m trying to look at a lot of those things that you don’t normally look at unless you’re under duress,” Reat, 62, of Worthington, Ohio, a Columbus suburb, said in a telephone interview.
Reat is among 5 million people across the U.S. whose emergency unemployment benefits will begin to expire at year-end if Congress doesn’t act to extend them. Those employed will see their paychecks reduced -- $1,000 a year for a worker earning $50,000 -- unless a related payroll tax credit is continued. The Senate has voted for a two-month continuation. House Republicans rejected it, saying the shortness of the extension creates uncertainty for employers.
President Barack Obama, a Democrat, called Republican House Speaker John Boehner yesterday, asking him to allow a vote on the Senate legislation, and saying it’s the “only option,” said Jay Carney, the White House press secretary.
The stalemate is forcing people such as Reat, who said his job as a customer-support manager was eliminated in 2009, to figure out other ways to make ends meet. Reat said he led a delegation to Washington earlier this month to lobby Boehner, an Ohioan from West Chester, for help and to make the case that individuals in his home state are struggling.
‘No Christmas Shopping’
“There’s no Christmas shopping for us right now,” said Ivan Almendarez, a 36-year-old from the Bronx who makes $47,000 a year before taxes as a janitor at New York University. “For a millionaire it’s not a big deal, but we live paycheck to paycheck.”
Almendarez is concerned about the prospect of an increase in the payroll tax after Jan. 1, he said in an interview. That levy, which funds Social Security, would rise to 6.2 percent from the current 4.2 percent. For the worker making $50,000 a year, the White House said it works out to about $40 a paycheck.
The loss of federal unemployment benefits that augment state assistance may affect as many as 5 million people, Labor Secretary Hilda Solis said Dec. 2.
In Ohio alone, an estimated 70,000 people will exhaust unemployment in January without congressional action, according to data provided by the Ohio Department of Job and Family Services. An additional 95,000 would lose aid in February and in March, the data show.
Food banks in Ohio already can’t keep up with a surge of people seeking assistance, and lost benefits in January will make it worse, said Lisa Hamler-Fugitt, executive director of the Ohio Association of Second Harvest Foodbanks.
“People are hurting, and for Congress to go home during the holidays without acknowledging that we have millions, tens of millions of people that are out here hurting, it’s stunning,” Hamler-Fugitt said by telephone from Columbus.
Jean Charte, 53, of Red Bank, New Jersey, said her annual income of $45,000 to $50,000 as a math and language-arts tutor has dropped to $920 every two weeks in unemployment benefits.
“I’m panicked,” Charte said yesterday in an interview in Spotswood, at a town-hall meeting called by Republican Governor Chris Christie. “We cut back on groceries. We have two cars. I’m thinking of going down to one car to cut the insurance. I just cut my phone plan. I’m going to cut my cable.”
Curtis Smith, 22, who said he makes $7.75 an hour as a sales associate at Macy’s in Brooklyn, recently visited a nearby career center to look for a second job. According to the Obama administration’s calculator, failure to renew the payroll tax cut will cost Smith about $310 a year.
“I don’t like it,” Smith said in an interview. “We’re getting taxed enough. The only way I could agree to that is if you give everybody raises, and I don’t think that’s going to happen.”
In Westminster, Colorado, 46-year-old Kelly Wiedemer earns $7.50 an hour behind the counter at a gas station known as The Corner Store -- about one-fourth of what she used to make as a financial analyst, she said in a telephone interview.
“Every penny counts, literally,” Wiedemer said. “There’s been times when I couldn’t buy things like toothpaste, hairspray and toilet paper. I’ve even had to think about food for my dog - - I hate to admit it.”
Michael Reubel of Philadelphia said he couldn’t sleep at night as the showdown over the payroll tax-cut and unemployment benefits dragged on.
Making the Rent
He won’t be able to make his $450 monthly rent without the aid, Reubel, 57, said in an interview at Pennsylvania CareerLink, a state agency offering job assistance, where he was sending an employment application to Whole Foods.
“You wake up in the morning and these 83 guys are holding the country hostage,” said Reubel, referring to House Republicans. “Eighty-three people in Congress shouldn’t be controlling the country.”
Democrats and Republicans in Congress blame each other for the impasse on extending the tax cut.
On Dec. 20, the White House blog asked readers to speak out on Facebook and Twitter about the payroll tax cut.
“The thousands of responses we’ve had so far are representative of the hundreds of thousands and millions of responses you would get if you were and the members of the House of Representatives were to survey their own constituents,” Carney said at a briefing Dec. 21.
George Vanni, 49, a truck maintenance worker from East Islip, New York, said the failure to extend the reduced payroll tax will cost him about $20 a week -- the amount of the raise he got this year.
“One cancels out the other,” Vanni said in a telephone interview. “It’s definitely a mental downer, especially this time of year.”
Reat said he wishes Obama and congressional Republicans would put their political differences aside.
“Both sides have become entrenched, and the old-fashioned value of compromise seems to have gone by the wayside,” he said. “Policymakers are supposed to make policy, and to see them not getting it done is a real tragedy for this country.”
To contact the reporter on this story: Mark Niquette in Columbus at email@example.com
To contact the editor responsible for this story: Jeffrey Taylor at Jtaylor48@bloomberg.net