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Image via Shutterstock

A new report finds unemployment insurance will run out for millions Dec. 26, which could cause harm that ripples throughout the economy.

Americans relying on unemployment insurance are facing a financial cliff if lawmakers fail to pass COVID-19 relief bill by the end of the year. In total, about 12 million Americans could lose their unemployment insurance. 

For months, Republicans have refused to consider coronavirus relief aid legislation passed by House Democrats months ago. There was some hope that a deal might be struck before the election when Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin continued talks, but nothing came of it. 

Now, a new report finds that more than half of the more than 21 million Americans currently using unemployment benefits will lose them the day after Christmas, due to deadlines imposed by Congress. Lawmakers chose the Dec. 26 deadline back in March, when there was hope that the pandemic would be well over by Christmas. 

The research for the report, released on Wednesday, was conducted by Andrew Stettner and Elizabeth Pancotti and published by the Century Foundation. 

“With no end to the pandemic in sight, and a cutoff of nearly all federal unemployment benefits by year’s end looming on the horizon, inaction by Congress could mean that millions of American families will enter the New Year with little or no means of support,” they wrote

The two note that in the months since the $600 per week federal unemployment assistance ran out, Republicans have focused on the price tag of a future relief package–not the looming deadline of existing benefits. 

“The debate in Congress and attention among the media mostly focused on the value of this benefit rather than the expirations of other unemployment benefits,” they wrote. “This cutoff threatens to pull the rug out from under an economy that has already seen millions of workers lose their state unemployment benefits this fall.”

Despite seeing some improvement over the summer and early fall, the economy is still missing over 10 million jobs when compared to the market before the pandemic, Stettner and Pancotti note. 

“Despite exciting progress toward a COVID-19 vaccine, the pandemic is currently spreading exponentially across the United States and will continue to hamper the economic recovery. There are simply not enough jobs being created to support all of the workers running out of aid before the end of 2020,” they wrote

Without federal COVID-19 relief aid, families who are already struggling are at an increased risk for food insecurity and eviction. 

The financial cliff isn’t just for regular Americans who have lost their jobs, as the overall economy could suffer if the Trump administration and Congress don’t act quickly. Unemployment benefit funds are typically spent right away on basic goods and necessities. This helps stimulate the economy. 

Without money to buy the basics and pay rent, the economy could contract even further. 

“Nobody is talking about this,” Stettner said in an interview with the Washington Post. “We’re just careening into this huge cliff and it’s like it’s not even happening. People are just totally, completely ignoring the situation at a time when things are getting worse before they’re going to get better in terms of public health. And that just really is going to constrain people’s ability to get a job when benefits run out.”