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Unemployment Benefits Expire, Again

By Bill Leonard  6/2/2010
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Once again, jobless benefits for long-term unemployed workers expired on June 2, 2010. Although the U.S. House of Representatives voted on May 28, 2010, to extend jobless benefits through November 2010, the Senate failed to act on the bill before adjourning for a weeklong recess.

Sources familiar with the issue say that the Senate could act quickly to approve the new extension after the recess. If the Senate does pass the measure (H.R. 4213), then it would be the third time Congress has approved a benefits extension in 2010. These multiple and temporary extensions have created an administrative nightmare for states trying to keep track of thousands of unemployed workers.

The legislation to extend the benefits beyond the 2010 congressional elections set off a heated Capitol Hill debate on how to pay for the measure. The original legislation included dozens of popular tax breaks and a federal subsidy program to help laid-off workers pay for health insurance coverage through the COBRA program.

The COBRA subsidy and a $24 billion emergency aid package for states were stripped from the bill when moderate Democrats and Republican members of the House balked at the bill’s original $140 billion price tag. Sources familiar with the issue say that Democratic leaders who favor the COBRA subsidy will attempt to pass separate legislation to extend the program through the end of 2010.

In an effort to pass the unemployment and tax breaks extension, House Democrats scrambled to reduce the cost of the bill to approximately $114 billion. In addition, the Democrats agreed on a plan that would raise nearly $60 billion and offset some of the bill’s cost by closing several tax loopholes and by raising taxes on investment fund managers, oil companies and U.S. businesses that operate overseas.

The Congressional Budget Office estimated that the House-passed bill would add nearly $54 billion to the federal deficit. The cost of continuing the unemployment benefit programs has many congressional members on edge as the November 2010 elections approach and the U.S. economy begins to recover.

“I think it’s time we figure out how we wind down unemployment [extensions] in the future so people begin to have some kind of notice that they will end,” Sen. Claire McCaskill, D-Mo., told reporters as the House prepared to vote on the measure. “This is something that is very hard to sustain with finances the way they are.”

McCaskill’s comments reflect the upcoming debate on what to do with the jobless benefits programs, sources say. While many moderate and conservative members of Congress argue that the federal spending must be cut, supporters of the programs claim the benefits are needed to help stimulate the sputtering U.S. economy.

“Many economists will tell you that unemployment compensation is the most direct money to Main Street because people are so desperate on unemployment that they have to spend the money, whether it’s for groceries, housing or utility bills,” said George Miller, D-Calif., chair of the House Education and Labor Committee.

Rep. Jim McDermott, D-Wash., chair of the House Subcommittee on Income Security and Family Support, announced plans to schedule a hearing sometime in July 2010 on the long-term unemployment issues. According to McDermott, the subcommittee will discuss if Congress should continue to extend or wind down long-term unemployment benefits. McDermott said that although he opposes the idea of ending the benefits extension, he wants to hear from a panel of experts.

Bill Leonard is a senior writer for SHRM.
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