GO
Loading...

Extend emergency jobless benefits: Obama advisor

Thursday, 2 Jan 2014 | 9:24 AM ET
Unemployment benefits expire for 1.3M Americans
Thursday, 2 Jan 2014 | 8:15 AM ET
Gene Sperling, National Economic Council director, shares his views on why long-term unemployment insurance needs to be extended as the national unemployment rates stands at 7.3 percent. Long-term unemployment is a more serious problem now than it's been in decades and decades, says Sperling.

The case for extending an emergency program to help long-term unemployed Americans would diminish if the nation's jobless rate eventually drops to low-6-percent levels, the outgoing director of the National Economic Council told CNBC on Thursday. But presidential adviser Gene Sperling argued that now is not the right time.

On Thursday, the Labor Department reported that Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 339,000.

(Read more: Claims dip for 2nd week in a row)

A week from Friday, the government will release the December employment report. November's reading saw the jobless rate fall to 7 percent with 203,000 nonfarm positions created.

"We, as a country, have never cut off emergency unemployment benefits when long-term unemployment was this high," Sperling contended in a "Squawk Box" interview. "Emergency unemployment benefits encourages more people to stay in the job market, because they lose those benefits if they're not actively looking for jobs."

The two-year budget deal, reached at the end of last year, did not include an extension of federal unemployment paychecks for people out of work for longer than six months. The program expired on Saturday, cutting off benefits for about 1.3 million people. "Over the course of the year, it will be 4.9 million people affected," Sperling said.

Getty Images

The Congressional Budget Office estimated that renewing the program until the end of 2014 would increase the inflation-adjusted GDP by 0.2 percent and lead to the creation 200,000 jobs.

Senate Majority Leader Harry Reid, D-Nev., has said he plans to hold a vote Monday on temporarily continuing federal jobless benefits for people out of work for longer than six months.

(Read more: Reid: Senate to vote on extending jobless benefits)

While President Barack Obama supports the extension, many Republicans do not. But House Speaker John Boehner, R-Ohio, has said he's open to considering such a move, but only if it's funded by other reductions in government spending.

In Thursday's interview, Sperling also said the president's call over the summer for a "grand bargain" on jobs should get another look. The idea had been to do two things in one package that Sperling said business leaders want—reforming corporate taxes, while investing in overhauling outdated infrastructure.

"So how about 'Squawk Box' making that their mission to get that 'grand bargain' for jobs for this year?" Sperling humorously encouraged.

At the time, Republicans leaders denounced the plan as a call for higher tax revenues to pay for questionable jobs programs.

Sperling will be stepping down as National Economic Council director after the president's State of the Union address on Jan. 28.

Jeffrey Zients—tapped in October to manage the emergency repairs of the federal Obamacare website—will be taking over for Sperling.

(Read more: Obamacare enrollment tops hits 2.1 million, 3 months to go)

Former Microsoft executive Kurt DelBene took over for Zients at HealthCare.gov last month.

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.

Introducing Morning Squawk: CNBC's before the bell news roundup

Sign up to receive Morning Squawk in your inbox each weekday › Sample