The Irish Independent reports that Taoiseach Brian Cowen will next week call the bluff of Enda Kenny and Eamon Gilmore by directly challenging them to detail how they would cut €4bn to salvage the public finances.

The Fine Gael and Labour leaders have so far refused to say where they would find the money to stave off the social welfare cuts being planned by the Government.

Mr Kenny and Mr Gilmore both insist they will set out where they would cut spending before the Budget is announced next month.

But the Government is planning to flush the opposition parties out on Tuesday with a special four-hour debate in the Dail -- giving them ample opportunity to set out their stall.

Yet again yesterday, the opposition leaders said their budgetary proposals would protect social welfare. Mr Kenny claimed he would not cut child benefit, while Mr Gilmore called for the Christmas bonus to be restored.

Mr Kenny said yesterday's Irish Independent had details of a "secret plan by Government to cut the rates of child benefit." Mr Gilmore said the failure to pay the bonus to pensioners was "mean and shameful".

The coalition parties are becoming increasingly impatient with the opposition's repeated habit of criticising cuts without saying where they would make the savings.

Finance Minister Brian Lenihan will this evening warn of the stark consequences for the country if he doesn't slash spending in December's Budget.

The Department of Finance is publishing its 'Pre-Budget Outlook' figures, showing what will happen to the economy if the Government doesn't take action next month.

He will reiterate plans to cut about €3.25bn from day-to-day spending and another €750m from capital spending next year.

Ahead of the December 9 Budget, the minister will also rule out significant tax increases as a way to tackle the deficit.

Mr Lenihan will announce a current budget adjustment of €3.25bn and say the bulk of this figure will come from spending cuts, rather than tax hikes.

Debate

Next week, Mr Lenihan will take part in a debate on the Budget, which the opposition parties agreed to last night.

The minister has repeatedly said he was open to suggestions.

Government chief whip Pat Carey said he believed the opposition parties would welcome the chance to say where they would identify €4bn in cuts.

He said he hoped the debate would be a "measured, mature and realistic" discussion on the available economic options.

However, it is not yet clear if the opposition parties will go public on their fully-costed budgetary proposals. They appear to be set to hold off until nearer Budget day.

Mr Kenny says Fine Gael has calculated it is not necessary to cut child benefit. He is effectively ring-fencing this €2.5bn budget from cutbacks.

And Mr Gilmore wants the Christmas bonus reinstated this year, at an estimated cost of €223m, while also ruling out cuts to child benefit.

Mr Kenny's spokesman said the party would clearly outline its alternative Budget in the coming weeks. Fine Gael says its figures for cuts in different areas would be different from the Government's targets. "We're not necessarily assuming the breakdown the Government has set out," the spokesman said.

Labour has been calling for the Christmas bonus to be reinstated since April. At that stage, the party said it believed revenue required for the payment could be raised through further restrictions on interest relief on rental property.

The party said it would set out its position on all areas of spending in its pre-Budget plans but added that these figures were "broadly correct".

Mr Kenny again pressed Mr Cowen to clarify if it was the Government's intention to cut child benefit.

"Today's Irish Independent carries a detailed set of proposals as part of what appears to be a secret plan. . . to cut the rates of child benefit,"he said.

Mr Kenny was referring to a report that every family would take a cut in child benefit under plans being considered for next month's Budget -- with the wealthiest being hardest hit.

The Irish Independent also reports that the Government must use whatever means it deems necessary to achieve the €4bn in cuts in the Budget if economic imbalances are to be addressed, Economic and Monetary Affairs Commissioner Joaquin Almunia warned here yesterday.

Mr Almunia said Finance Minister Brian Lenihan "is doing a very good job," but criticised Greece for "failing to take effective action." "How this correction is spelled out in concrete measures on the revenue side or the expenditure side is the responsibility of the national government," he said. The Government had stepped up to the plate in addressing our economic woes, he added.

"I have to say also that the reaction of the authorities, the decisions adopted and their determination to pursue the adjustment process and reducing balances . . . puts the Irish economy in a good perspective of sustained growth."

In a European Commission statement on budget deficits across the EU, Mr Almunia confirmed that Ireland and the UK have been given another year -- to 2014 -- to bring their deficits below the permitted ceiling of 3pc of GDP. France and Spain have also been given an extra year -- to 2013 in their case. Nine more countries have been put on the commission's "excessive deficit procedure", where borrowing exceeds the limits.

Surpluses

The report says the Government should proceed with its €16bn budget correction even if the economy performs better than expected, so as to achieve the 3pc figure sooner.

"For Ireland, the commission recommends that the Government specifies consolidation measures in the Budget for 2010 in line with the package announced in the April supplementary Budget, and ensures an average annual structural budgetary adjustment of two percentage points of GDP over the period 2010-2014," it says. It also recommends budget surpluses after that, so as to reduce the size of the national debt towards the EU target level of 60pc of GDP.

"The Government should accelerate the reduction in the deficit if economic or budgetary conditions turn out to be better than currently expected and seize every opportunity, beyond the structural adjustment, to accelerate the reduction of gross debt towards the 60pc of GDP reference value,"it says. On Tuesday economists at consultants Ernst & Young said Ireland's 3pc target was unlikely to be reached before 2017, even if the Government sticks to its plan. But Mr Almunia said the extra year should be enough time to bring the deficit into line.

Precedent exists for longer extensions, but Mr Almunia said this would not apply in Ireland's case.

"There is a possibility to extend further, but only in a very particular case. For example, we used this exceptionality of two years in the case of Hungary. This was a very specific case that does not apply to Ireland, Spain and France."

The Irish Times reports that the Government has reiterated its plan for severe cuts in next month’s budget, despite further planned work stoppages in the public sector and a one-year extension by the European Commission in the timetable for restoring the public finances.

The one-year extension by the commission was described by a Department of Finance spokesman as “not in any way an invitation to ease off on necessary and urgent” budgetary adjustments.

“The impact of this is to lessen the action that might need to be taken in later years. It does not obviate the need for us to act now,”the spokesman said.

He emphasised that delaying the necessary action was not an option as that would require harsher measures to be taken later. It would also result in ever-increasing amounts of Government resources being used to service the mounting debt.

In the Dáil, Taoiseach Brian Cowen said social welfare could not be immune from the budgetary adjustment which would have to be made on December 9th.

“If we do not make the adjustment, the prospect of a sustainable level of service provision for people dependent on social welfare would be put at greater risk and a greater adjustment would have to be considered in the future,”said Mr Cowen.

In Brussels, EU monetary affairs commissioner Joaquín Almunia justified the one-year extension in Ireland’s timetable for budgetary adjustment in the light of the unexpected scale of the economic downturn affecting the country.

He emphasised that the Irish authorities must act to correct the imbalance in the public finances.

“How this correction is spelled out in concrete measures in the revenue side or in the expenditure side belongs to the responsibility of the national government.

“It’s a good question for Mr Lenihan. But, on the other hand, I think he’s doing a very good job.

“The deterioration of the Irish economy in terms of contraction of the GDP is the biggest in the euro area. But I have to say also that the reaction of the authorities, the decisions adopted, the determination to pursue an adjustment process, to reduce imbalances and put again the Irish economy in a good perspective of sustained growth, is the highest in the euro area also,” said Mr Almunia.

Pre-budget estimates due to be published today by the Department of Finance will forecast a further contraction of 1.5 per cent in the economy next year, after a shrinkage of 7.5 per cent this year.

According to the estimates, the budget deficit will be 12 per cent of GDP, assuming the Government achieves savings of €4 billion in the budget.

About 3,500 people took part in a protest in Dublin yesterday organised by the 24/7 Frontline Services Alliance. The marchers included gardaí and nurses who oppose proposed cuts in the allowances they receive on top of basic pay.

The alliance is planning to escalate its campaign from the weekend. They will ask every TD to declare publicly their position in relation to possible cuts in pay or allowances.

It emerged last night that the Government is facing the prospect of a number of stoppages by staff across the public service in the weeks ahead.

Public service staff are already planning a nationwide one-day strike on November 24th. However, union leaders warned yesterday that further industrial action could take place.

During the planned strike on November 24th, public sector unions will only provide emergency cover.

The Irish Times also reports that a quarter of the hotel rooms in Ireland need to be closed down urgently because the sector in its entirety is insolvent, according to a report by economic consultant Peter Bacon.

The report, which was commissioned by the Irish Hotels Federation (IHF), states that the “orderly elimination” of about 15,000 hotel rooms should begin before next year’s peak summer season.

Dr Bacon said most of the hotels that had been built as a result of tax breaks were now insolvent, but that the banks that financed their development were not foreclosing on the developers’ loans to avoid a negative impact on their balance sheets.

The report calls on the Government to remove the tax relief clawback provisions that currently apply if a hotel ceases to trade within seven years of receiving the tax break.

Dr Bacon said the clawback was preventing hotels that wanted to close from shutting down, with the result that the entire sector was now struggling to survive.

The Government should remove the clawback in next year’s Finance Act, he said.

Dr Bacon is sharply critical of the legacy of tax breaks for the hotels industry which led to the building of non-viable hotels, with the debt on the rooms exceeding their value even at the peak of the market.

“Most of these investments didn’t make sense at the time they were done . . . They were being driven in effect by tax,”he said.

By 2008, an average of €118,000 was owed per hotel room in Ireland, but the average value of the rooms declined sharply after 2005 and stood at €100,800 last year. Hotel rooms were therefore worth an average of €17,000 less than the debt per room.

“Given the ongoing and intensifying difficulties being experienced by the sector, it is considered that this deficit will have increased in 2009,”the report states. Dr Bacon calls for the establishment of a high level group comprising representatives of the hotels, tourism and financial sectors to begin the process of reducing capacity in the sector.

Dr Bacon said it was difficult to estimate how many jobs would be lost as a result of the closure of 15,000 hotel rooms, but that he expected it would be “relatively few” as there had already been a “significant shake-out” in the sector as a result of hotel occupancy rates as low as 50-55 per cent.

More jobs would be lost by “doing nothing at all”, he said.

Meanwhile, the Central Bank and the Financial Regulator should investigate why banks are not foreclosing on hotel developers whose loans have gone bad, Dr Bacon said yesterday.

“The burden of adjustment that you would expect to see on bank balance sheets is being pushed out to the hotels sector,”he said.

“The result is that the entire hotels sector is being compromised, and its sustainability and viability in the future is being questioned.”

Dr Bacon dismissed the idea that the removal of tax relief clawback provisions would create a “moral hazard”, whereby failed investors were freed from the consequences of their actions.

“This is not a bailout for hotels,”he said. “Market forces are not working. We cannot have a situation where zombie banks result in a zombie hotels sector or zombie-other-sectors.”

The Government should consider setting up a hotel restructuring fund to assess which hotels should be shut down and which might be insolvent but of strategic importance for the tourism industry, such as five-star hotels in key areas, Dr Bacon added.

It should also examine whether hotels that are “surplus” to the requirements of the tourism industry can be converted into alternative uses such as healthcare or educational facilities.

Some 26,802 new hotel rooms were opened between 1999-2008. The stock of new hotel rooms has been insolvent since 2005, while the sector as a whole has been insolvent since 2008, Dr Bacon’s report states.

Chief executive of the IHF John Power said a maximum of 5 per cent of hotels were running a profit. “Hotels are in survival mode at the moment.”

Hotel closures: the top five 

Barry’s Hotel 

The company behind Barry’s Hotel, one of Dublin’s oldest hotels and the scene of gunfire shortly after the 1916 Easter Rising, went into liquidation this week. The hotel was opened in 1889 by a Mrs Barry on the site of two Georgian houses in Great Denmark Street.

Morrison Hotel 

Hugh O’Regan of Thomas Read Holdings, the shareholder of Morrison Hotel Ltd, , is in liquidation. The company, which operates the hotel, is being sued for €3.7 million in alleged unpaid rent.

Trinity Capital and Grafton Capital hotels 

In September the O’Dwyer brothers Liam and Des put the Trinity Capital on Pearse Street, Dublin, and the Grafton Capital near St Stephen’s Green into provisional liquidation. Both hotels are part of their Capital Bars chain of pubs and hotels.

Tallaght Cross and Glashaus hotels, Tallaght 

Property developer Liam Carroll closed down the Glashaus and the Tallaght Cross hotels in January – within a year of their openings – with the loss of 72 jobs. Both have since reopened, offering rooms to rent on a long-term basis.

Ostán na Rosann, Donegal 

The only hotel in Dungloe, Co Donegal, Ostán na Rosann closed suddenly this week with the loss of 30 full and part-time jobs. The 48-room hotel is part of MMC Hotels, owned by the McBride family. A liquidator has been appointed, and the owners attributed the closure to a severe downturn in the Irish and world economy.

The Bacon hotels report by the numbers 

26,802 – the number of new hotel rooms opened in Ireland from 1999-2008.

15,000 – the number of hotel rooms that should close down to avoid catastrophe in the sector.

€17,000 – the average negative net asset value of hotel rooms.

€1bn – total excess of debt over room assets in the hotel sector in 2008.

25 – percentage drop in room rates in real (inflation-adjusted) terms between 2000 and 2008.

11 – the percentage drop in the number of overseas visits to Ireland in the first eight months of 2009.

The Irish Examiner reports that employer's representative body IBEC has called for a meeting with the Pensions Board over its recently issued guidelines for pension schemes, which have variously been described as being short- sighted, rigorous and intolerable.

IBEC and other industry bodies have reacted angrily to the Pensions Board’s latest guidelines surrounding section 50 applications.

These applications seek permission from the body to reduce benefits previously offered within occupational pension schemes, in order to meet the minimum funding standard requirement.

It is thought that a large number of defined benefit schemes are considering making Section 50 applications due to their challenge in meeting funding standards. It has already been estimated that more than 90% of all defined benefit schemes in the country have funding shortfalls.

While the Pensions Board has said that the new guidelines are no stronger than previous levels, IBEC has warned they will force many employers to wind up some defined benefit schemes.

Industry consultant Mercer – in a letter to clients – basically agreed. It called the new measures "far more prescriptive" and "rigorous" than expected and said that in many cases it may not be feasible to formulate a recovery plan that complies with the new requirements "and schemes will, therefore, have to be wound up".

It is understood that the Society of Actuaries in Ireland has also met with the Pensions Board over the issue. However, a spokesperson for the organisation yesterday refused to comment on the outcome of those talks.

The Pensions Board said that its aim, with the updated guidelines, was to ensure that pension schemes can be assured of coping in adverse economic conditions.

The organisation added that it would only be granting Section 50 applications where it is satisfied that the proposed future operation of the scheme"is robust enough to make any further application unlikely".

The Financial Times reports that although unemployment remains painfully high, the UK’s labour market is not only performing better than in past recessions, but it is also so far functioning relatively well by international standards.

By rights, it should be in a category with the US, Spain and Ireland – all countries that have suffered from the collapse of housing bubbles, in addition to a banking crisis and the global recession this has caused.

US unemploymenthas more than doubled to 10.2 per cent of the workforce since 2007, while Ireland’s has trebled to 13 per cent and that of Spain has more than doubled to 19 per cent.

But UK unemployment has risen over the same timescale by just 2.5 percentage points to 7.8 per cent – slightly better than the average rise seen in countries of the Organisation for Economic Co-operation and Development, although not quite as good as the eurozone’s performance.

The story of this recession so far has been the inverted roles of the US, normally seen as a job-creating flexible market, and Europe, often seen as a sclerotic environment with powerful unions and rigid hiring and firing rules.

Eurozone unemployment, although high at 9.7 per cent, has risen by just 2.2 points, even though many countries have seen larger falls in output than the US. Governments have achieved this with the help of short-time working schemes, in which people work fewer hours while the government tops up their pay, although there are questions about whether this merely delays job losses.

The UK is sometimes described as having an “Anglo-social” model, midway between the US and European variants. On this occasion, it has achieved a similar performance to other European countries but without a short-time working scheme.

The government, naturally, cites its economic stimulus measures, including £5bn ($8.3bn) aimed at creating or protecting jobs, although the impact of these is hard to quantify. They include £500m of “golden hello” recruitment subsidies for employers and the £1bn Future Jobs Fund, which subsidises the creation of 150,000 jobs for young people and those in unemployment hotspots.

The government’s “active labour market policies”, which combine stricter welfare rules with measures to encourage people back to work, seem to be having an effect. Extra staff have been drafted into the Jobcentreplus network earlier than in past recessions to keep up pressure on job seekers to look for work.

Although redundancies have been high, more than 300,000 job seekers’ allowance claimants have been leaving the register each month, many presumably to take up jobs. A significant rise in long-term unemployment has so far been avoided and 70 per cent of claimants are leaving the register within six months.

“Given a doubling of numbers coming through the door, to sustain that level of performance is a pretty good testament to the way the system is holding up,” said Jim Knight, employment minister.

Most important of all, perhaps, has been the flexibility seen within the labour market itself, whereby employers have used pay freezes and shorter working hours to hold on to skilled employees whom they will need in the upturn – creating a similar effect to that seen in the eurozone but by voluntary measures rather than by state schemes.

John Philpott, chief economist at the Chartered Institute of Personnel and Development, said this was a “British-style flexible labour market” that “enables employers and workers voluntarily to adjust pay and hours of work, thereby limiting job cuts, while also ensuring that available public funds can be targeted at helping jobless people to move from welfare to work rather than used to support people already in jobs”.

But while reduced hours and pay restraint have restricted job losses, this may also slow down a labour market recovery as employers increase the hours staff work before they start hiring new people. Mr Philpott said the best we could hope for was “a very gradual increase in job creation with little prospect of a return to the pre-recession rate of unemployment before 2015”.

The FT also reports that Hong Kong and Singapore, Asia’s two biggest international financial centres, are at serious risk of disastrous flooding and other catastrophes caused by global warming, according to a report published on Thursday.

The report, produced by WWF, the environmental pressure group, puts the two financial hubs in the top 10 cities threatened by climate change in Asia, the region widely believed to be most vulnerable to rising global temperatures.

It warns that Hong Kong is in danger from higher sea levels, which are likely to rise 40cm-60cm in China’s Pearl River delta by 2050, increasing the area of coastline that is vulnerable to flooding by up to six times.

Costs imposed by typhoons are also likely to rise dramatically, the report says, noting that 14 of the 21 extreme storm surges between 1950 and 2004 occurred after 1986.

The number of nights when Hong Kong temperatures rise above 28°C has risen almost fourfold since the 1960s, while the number of winter nights when the temperature falls below 12°C is predicted to fall from an average of 21 to zero within 50 years.

For Singapore, the report says, the sea level is forecast to rise by 60cm by the end of the century, eroding coastal protection and decreasing the shoreline of the city state, making it more vulnerable to storm surges and flooding.

The report says climate change could also increase the prevalence of dengue fever. The number of cases has been rising in periodic outbreaks and the last significant peak, in 2007, saw the third highest number of outbreaks ever.

Dhaka, the Bangladeshi capital, heads the list of the most vulnerable cities, mainly because of its position in a big river delta already subject to periodic flooding, its low average height above sea level and its poverty, which makes protection and adaptation more difficult.

Other cities at risk include Jakarta and Manila, which rank equal second, Calcutta and Phnom Penh, which are equal third, Ho Chi Minh and Shanghai, equal fourth, Bangkok, fifth, and Kuala Lumpur, which ties with Hong Kong and Singapore for sixth place.

The report calls on developed countries to agree to shoulder the bulk of the costs required to reduce greenhouse gas emissions, to finance an adaptation fund to pay for changes required in developing countries, and to provide recompense for losses and damage caused by climate-related catastrophes.

However, the report also says that vulnerable cities and national governments should take action themselves, including better management of coastal habitats and ecosystems.

The New York Times reports that Hewlett-Packard said on Wednesday that it had reached an agreement to acquire 3Com, a provider of computer network equipment, for $2.7 billion in a deal that H.P. plans as a springboard for an assault on the market leader in networking, Cisco Systems.

In an interview, Ann M. Livermore, an executive vice president of H.P., described computer networking as a $40 billion-a-year market with high profit margins that is growing briskly and dominated by Cisco, which has so far had little head-to-head competition.

“H.P. is eager and now positioned to disrupt the networking industry,”Ms. Livermore said.

The offer price, $7.90 a share, is at a premium of about 39 percent to 3Com’s closing price on Wednesday. The deal was announced after the market closed.

Under Mark V. Hurd, its chief executive, Hewlett-Packard has been beefing up its network equipment offerings to compete more aggressively against Cisco to sell data center equipment to corporations.

But so far, H.P. has mostly supplied smaller equipment used in office networks, both wired and wireless.

“What we’ve been missing is networking for the core of the data center,” Ms. Livermore said.“That’s where Cisco is strong, and before, H.P. couldn’t attack that.”

This year, Cisco went after one of H.P.’s core businesses by entering the market for server computers used in data centers. Cisco also recently teamed with EMC, another technology giant, to sell data center equipment to businesses.

H.P. also provided investors with an early look at its earnings for its fiscal fourth quarter, which ended in October, and raised its estimates for the next year. The company reported a profit, excluding some items, of $1.14 a share in the fourth quarter, which slightly beat expectations of a $1.12 a share, as compiled by Thomson Reuters.

Revenue in the quarter was $30.8 billion, down 8 percent from a year ago. But the company’s sales performance beat analysts’ forecasts by $1 billion.

H.P. joins a series of technology companies that have reported better-than-expected results recently, including Intel and I.B.M.

“Solid execution drove exceptional performance for H.P. this quarter, fueled by significant growth in China,”Mr. Hurd said in a statement.

H.P. also raised its forecast for its 2010 fiscal year. The company said it expected revenue for fiscal 2010 to be $118 billion to $119 billion, up somewhat from its previous estimate of $117 billion to $118 billion. It forecast earnings per share, excluding some items, to be $4.25 to $4.35, up from the earlier forecast of $4.20 to $4.30.

In 3Com, H.P. is acquiring a company with a rich heritage in network technology and a solid product portfolio, analysts say. But it lacks Cisco’s size and credibility in the data center market, where large corporate customers look for strong suppliers who can provide a full range of products and services.

H.P. may well be able to fill those gaps, with its strong services, storage and server computer businesses. “3Com, with H.P.’s backing, is capable of making a real run at Cisco,” said Rob Enderle, an independent technology analyst.

But analysts said that while 3Com would give H.P. crucial technology to broaden its reach in networking, further product development and marketing investment would be needed to compete directly with Cisco in large data-center accounts. “It will be a two-year process to roll this out,” said Jeffrey Evenson, an analyst at Bernstein Research.“This is a longer-term play.”

While trailing well behind Cisco in most markets, 3Com is strong in China. Half of its $1.3 billion in sales comes from the Chinese market. Three hundred of the largest 500 companies in China, and 70 percent of government agencies, use 3Com equipment, Ms. Livermore said.

Last year, a deal to sell 3Com for $2.2 billion to an alliance of Bain Capital, a private equity firm, and Huawei Technologies, a Chinese maker of networking equipment, fell apart after a federal review panel, the Committee on Foreign Investment in the United States, expressed national security concerns about the transaction.

3Com shares were up more than 30 percent, at $7.67, in after-hours trading on Wednesday. H.P. shares were down slightly. Trading in 3Com call options — contracts to buy 3Com shares at a fixed price — surged Wednesday to their highest level since September 2007, suggesting that word of the deal may have leaked before the announcement.

The NYT also reports from Texas that Paul Bachmuth’s 9-year-old daughter, Rebecca, began pulling out strands of her hair over the summer. His older child, Hannah, 12, has become noticeably angrier, more prone to throwing tantrums.

Initially, Mr. Bachmuth, 45, did not think his children were terribly affected when he lost his job nearly a year ago. But now he cannot ignore the mounting evidence.

“I’m starting to think it’s all my fault,”Mr. Bachmuth said.

As the months have worn on, his job search travails have consumed the family, even though the Bachmuths were outwardly holding up on unemployment benefits, their savings and the income from the part-time job held by Mr. Bachmuth’s wife, Amanda. But beneath the surface, they have been a family on the brink. They have watched their children struggle with behavioral issues and a stress-induced disorder. He finally got a job offer last week, but not before the couple began seeing a therapist to save their marriage.

For many families across the country, the greatest damage inflicted by this recession has not necessarily been financial, but emotional and psychological. Children, especially, have become hidden casualties, often absorbing more than their parents are fully aware of. Several academic studies have linked parental job loss — especially that of fathers — to adverse impacts in areas like school performance and self-esteem.

“I’ve heard a lot of people who are out of work say it’s kind of been a blessing, that you have more time to spend with your family,”Mr. Bachmuth said.“I love my family and my family comes first, and my family means more than anything to me, but it hasn’t been that way for me.”

A recent study at the University of California, Davis, found that children in families where the head of the household had lost a job were 15 percent more likely to repeat a grade. Ariel Kalil, a University of Chicago professor of public policy, and Kathleen M. Ziol-Guest, of the Institute for Children and Poverty in New York, found in an earlier study that adolescent children of low-income single mothers who endured unemployment had an increased chance of dropping out of school and showed declines in emotional well-being.

In the long term, children whose parents were laid off have been found to have lower annual earnings as adults than those whose parents remained employed, a phenomenon Peter R. Orszag, director of the White House Office of Management and Budget, mentioned in a speech last week at New York University.

A variety of studies have tied drops in family income to negative effects on children’s development. But Dr. Kalil, a developmental psychologist and director of the university’s Center for Human Potential and Public Policy, said the more important factor, especially in middle-class households, appeared to be changes in family dynamics from job loss.

“The extent that job losers are stressed and emotionally disengaged or withdrawn, this really matters for kids,” she said.“The other thing that matters is parental conflict. That has been shown repeatedly in psychological studies to be a bad family dynamic.”

Dr. Kalil said her research indicated that the repercussions were more pronounced in children when fathers experience unemployment, rather than mothers.

She theorized that the reasons have to do with the importance of working to the male self-image, or the extra time that unemployed female breadwinners seem to spend with their children, mitigating the impact on them.

Certainly, some of the more than a dozen families interviewed that were dealing with long-term unemployment said the period had been helpful in certain ways for their families.

Denise Stoll, 39, and her husband, Larry, 47, both lost their positions at a bank in San Antonio in October 2008 when it changed hands. Mrs. Stoll, a vice president who managed a technology group, earned significantly more than her husband, who worked as a district loan origination manager.

Nevertheless, Mr. Stoll took unemployment much harder than she did and struggled to keep his spirits up, before he landed a new job within several months in the Kansas City area, where the family had moved to be closer to relatives. He had to take a sizable pay cut but was grateful to be working again.

Mrs. Stoll is still looking but has also tried to make the most of the additional time with the couple’s 5-year-old triplets, seeking to instill new lessons on the importance of thrift.

“Being a corporate mom, you work a lot of hours, you feed them dinner — maybe,” she said. “This morning, we baked cookies together. I have time to help them with homework. I’m attending church. The house is managed by me. Just a lot more homemaker-type stuff, which I think is more nurturing to them.”

Other families, however, reported unmistakable ill effects.

Robert Syck, 42, of Fishers, Ind., lost his job as a call-center manager in March. He has been around his 11-year-old stepson, Kody, more than ever before. Lately, however, their relationship has become increasingly strained, Mr. Syck said, with even little incidents setting off blowups. His stepson’s grades have slipped and the boy has been talking back to his parents more.

“It’s only been particularly in the last few months that it’s gotten really bad, to where we’re verbally chewing each other out,”said Mr. Syck, who admitted he had been more irritable around the house. “A lot of that is due to the pressures of unemployment.”

When Mr. Bachmuth was first laid off in December from his $120,000 job at an energy consulting firm, he could not even bring himself to tell his family. For several days, he got dressed in the morning and left the house as usual at 6 a.m., but spent the day in coffee shops, the library or just walking around.

Mr. Bachmuth had started the job, working on finance and business development for electric utilities, eight months earlier, moving his family from Austin. They bought something of a dream home, complete with a backyard pool and spa.

Although she knew the economy was ultimately to blame, Mrs. Bachmuth could not help feeling angry at her husband, both said later in interviews.

“She kind of had something in the back of her mind that it was partly my fault I was laid off,”Mr. Bachmuth said.“Maybe you’re not a good enough worker.”

Counseling improved matters significantly, but Mrs. Bachmuth still occasionally dissolved into tears at home.

Besides quarrels over money, the reversal in the couple’s roles also produced friction. Mrs. Bachmuth took on a part-time job at a preschool to earn extra money. But she still did most, if not all, of the cooking, cleaning and laundry.

Dr. Kalil, of the University of Chicago, said a recent study of how people spend their time showed unemployed fathers devote significantly less time to household chores than even mothers who are employed full-time, and do not work as hard in caring for children.

Mr. Bachmuth’s time with his girls, however, did increase. He was the one dropping off Rebecca at school and usually the one who picked her up. He began helping her more with homework. He and Hannah played soccer and chatted more.

But the additional time brought more opportunities for squabbling. The rest of the family had to get used to Mr. Bachmuth being around, sometimes focused on his search for a job, but other times lounging around depressed, watching television or surfing soccer sites on the Internet.

“My dad’s around a lot more, so it’s a little strange because he gets frustrated he’s not at work, and he’s not being challenged,”Hannah said.“So I think me and my dad are a lot closer now because we can spend a lot more time together, but we fight a lot more maybe because he’s around 24-7.”

When Rebecca began pulling her hair out in late summer in what was diagnosed as a stress-induced disorder, she insisted it was because she was bored. But her parents and her therapist — the same one seeing her parents — believed it was clearly related to the job situation.

The hair pulling has since stopped, but she continues to fidget with her brown locks.

The other day, she suddenly asked her mother whether she thought she would be able to find a “good job” when she grew up.

Hannah said her father’s unemployment had made it harder for her to focus on schoolwork. She also conceded she had been more easily annoyed with her parents and her sister.

At night, she said, she has taken to stowing her worries away in an imaginary box.

“I take all the stress and bad things that happen over the day, and I lock them in a box,”she said.

Then, she tries to sleep.