Congress extends jobless benefits, stocks sink
By JIM ABRAMS
Associated Press
November 21, 2008
Page 2 of 2
The vote could wrap up this session of Congress -- with the possibility of the December return. The Democratic leaders' main condition for that special session was that the Big Three automakers first present a plan showing how federal aid would help them modernize.
"Until we can see a plan where the auto industry is held accountable," said House Speaker Nancy Pelosi, "we cannot show them the money."
"We are prepared to come back into session the week of Dec. 8 to help the auto industry," Senate Majority Leader Harry Reid said. "But only if they present a responsible plan that gives us a realistic chance to get the needed votes."
Congressional Democrats had sought to move legislation that would direct $25 billion from the $700 billion financial rescue plan to the automakers to ensure they can stay in business until the spring. They abandoned those plans this week in the face of resistance from the White House and Senate Republicans.
The broader economic questions of what further actions Washington must take to avoid more home foreclosures and rectify staggered financial markets will probably have to wait until January, when the new Democratic-dominated Congress will convene and Barack Obama will be in the White House. An economy-stimulating package that could run into the hundreds of billions of dollars is likely to be on the agenda when the next Congress opens.
Treasury Secretary Henry Paulson said Thursday that the financial crisis now plaguing the world economy is something that happens "once or twice" in 100 years.
The need to address the deteriorating job situation was one area that everyone could agree. "The recent financial and credit crisis has slowed the economy, and it's having an impact on job creation," White House press secretary Dana Perino said in urging Congress to pass the benefits extension.
Congress has enacted federally funded extensions seven times in the past 50 years during economic slumps -- in 1958, 1961, 1972, 1975, 1982, 1991 and 2002.
The Bush administration contends that past extensions occurred only when the unemployment rate was considerably higher.
Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes, either state or federal.
Before Thursday's quick resolution, the White House had threatened to veto a broader, $61 billion stimulus bill that would have helped states maintain Medicaid benefits and extend funds for public works projects in addition to the extending the jobless benefits.
In yet another bad sign for the economy's near future, the private, New York-based Conference Board said Thursday that its monthly forecast of economic activity declined 0.8 percent in October. Over the past seven months, the index has declined at a 4.7 percent annual rate, faster than at any other time since 2001.
Most of the decline was due to the drop in stock prices, a decline building permits and sagging consumer expectations.
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Associated Press writers Jeannine Aversa, Christopher S. Rugaber, Deb Riechmann, Ellen Simon and Ken Thomas contributed to this report.
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