March 2, 2010 -- When Doug Wood lost his job managing a Ruby Tuesday restaurant near Los Angeles in late 2008, he figured on collecting unemployment for only a couple of months until he found another job.

He's still looking.

"In a few weeks the benefits completely run out," said Wood, 47, a resident of Norco, Calif. "I'm trying to look on the bright side of things, but I'm running out of time, and options."

Wood is one of more than 11 million Americans currently collecting unemployment insurance benefits, paid for by a mix of state and federal money. Some 40 percent of the nation's jobless, like Wood, have collected benefits for at least the past six months.

With the national jobless rate still near 10 percent, the recession grinding onward and benefits claims continuing to mount, the entire unemployment system is being stretched beyond capacity.

Since the end of 2008, some 29 states, including California, have completely run out of funds to pay unemployment claims, and have resorted to borrowing federal money. It comes to about $33 billion, according to George Wentworth, a policy analyst with the New York-based National Employment Law Project.

If jobless claims continue at current rates, the Federal Unemployment Account (FUA), part of the Unemployment Trust Fund (UTF), which is administered by the Department of Labor, could, by 2012, be facing billions in shortfalls. By that time, a projected 40 states will have borrowed approximately $90 billion, twice as much as what the government earmarked last year for the entire UTF. Private employers will likely face higher state and federal taxes to keep the Labor Department's trust funds solvent, Wentworth explained.

Pushed to the Limit

"This recession is pushing the country's unemployment system to the limits," Wentworth said. "With the majority of state trust funds insolvent it's time for Congress to get involved."

This weekend Congress was unable to provide even a basic stopgap measure that would have extended federal benefits, due to staunch opposition from Republican Sen. Jim Bunning of Kentucky.

But Bunning now seems ready to negotiate, and today told ABC News that he is working on a deal to allow the unemployment extension bill to pass.

Sen. Judd Gregg, R-N.H., tells ABC the deal would allow for a vote on off-setting the bill's $10 billion price tag with cuts in other programs followed by a vote on the bill itself. This was an offer Bunning rejected last Thursday.

Bunning, who is set to retire, had repeatedly resorted to a filibuster, objecting to the addition of $10 billion to the deficit without Congress having identified a way to pay for the measure.

The bill would extend jobless benefits for as many as 400,000 people, among other things.

States Short Billions

Senate Majority Leader Harry Reid has vowed to move ahead with efforts to get the temporary measure passed, as well as proceed with a separate plan to shore up the federal extended benefits program permanently, at a cost of $100 million.

"We'll keep pressing this until GOP leaders talk some sense into Bunning," said Jim Manley, a spokesman for Reid.

Among the 29 states that have run through their own unemployment insurance benefit funds, incidentally, is Bunning's home state of Kentucky, which has borrowed around $700 million from the Federal Unemployment Account. California, Florida, Illinois, Indiana, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania and Texas all have borrowed more than $1 billion from the federal government since 2008; in fact, California alone has borrowed more than $7 billion.

Currently, there are three unemployment benefits programs. First, there are state-paid benefits. These usually last 26 weeks, and vary, depending on the state, usually averaging out to no more than a few hundred dollars per week.

When the state benefits run out, the unemployed can qualify for federally funded emergency unemployment compensation, followed, finally, by an extended benefits program, for up to 20 weeks. Some unemployment benefits, depending on the state, can run as long as 99 weeks.

During the last extended recession, in the early 1980s, most unemployment programs lasted no longer than 55 weeks.

Cher Horner, 62, lost her job at a Naples, Fla., newspaper where she sold classified ads. That was in November 2008. Since that time, her husband has been diagnosed with cancer. She had never filed an unemployment claim in her life, but she figured she had no other choice.

Horner's unemployment benefits, around $175 per week, run out in a few weeks unless she can get a federal extension -- which now may not be possible if Congress can't figure out a way to secure funding.

"I'm at age when I'd like to retire," Horner sighed. "It's to the point where we'll have to walk away from our home and move in with our daughter. I literally do not know what to do next. No one will hire me."

As for Wood, he's gone through all possible extensions of benefits and is not sure what he will do next. He has sent resumes to every restaurant in the area and hopes for the best.

"If my benefits could be extended, sure, that would be great," he said. "But I'm certainly not counting on the government to help me."