Next Round in Battle to Renew Long-Term Unemployment Benefits

Last Friday, the Bureau of Labor Statistics reported a sharp increase in the number of long-term jobless workers — 203,000 more who’d been unemployed and actively looking than in January.

This brought the average number of weeks jobless workers had been looking up to 37.1 — about 11 weeks more than most state unemployment insurance programs cover.

At least two million jobless workers have no UI benefits now, but would if Congress renewed Emergency Unemployment Compensation — and back-dated it to the end of December, when the program expired.

As I’m sure you know, Senate Democrats have been trying to pass an EUC extension since mid-December. Republicans haven’t delivered the five votes needed for the Senate to vote on the extension itself.

The ostensible hang-up is the offset, i.e., the source or sources of funds that would keep the extension from adding to the near-term deficit. But some of the potentially persuadable Republicans have further complicated matters by insisting on amendments to reform UI.

And as if that weren’t enough, they wanted the package to include a repeal of the temporary, modified cost-of-living adjustment for military pensions that was part of the December budget deal.

Well, the Senate took care of the repeal in mid-February, using a pay-for Republicans wouldn’t accept for the EUC extension. Now it’s going back to EUC again.

Majority Leader Harry Reid is calling for a six-month extension — five months shorter than the paid-for version he’d earlier proposed. He’d use savings already achieved in the new Farm Bill as the offset. Politico reports the cost at about $12 billion. That would leave about $11 billion for deficit reduction.

Seven Republicans have countered with a five-month extension. They’ve got an altogether different pay-for. And they fold in program “improvements,” including one that has little or nothing to do with unemployment compensation.

Too much to cram into one post. So I’ll deal with the pay-for here. As you’ll see, the Gang of Seven seems to have moved toward the Democratic majority. This, alas, is not an altogether good thing.

The pay-for has three parts. The first would extend so-called pension smoothing provisions that Congress earlier used to help pay for the highway bill.

Basically, pension smoothing allows employers to temporarily reduce their contributions to employee pension plans. This raises revenues for awhile because the contributions are tax-deductible.

But it then loses revenues because employers have to make up what they didn’t contribute earlier. The losses, however, fall outside the 10-year period used to estimate what federal laws will cost.

In short, it’s what the Center on Budget and Policy Priorities calls a “timing gimmick.” It also, as the Committee for a Responsible Federal Budget says, raises the risk that pension funds will need a bailout, thus further increasing federal costs.

Senate Republicans shot down pension smoothing when Reid tried to use it for a three-month EUC extension — or at any rate, they blocked the bill, claiming (rightly) that he limited their chances to amend it.

A second part of the pay-for is a modified version of an amendment Senator Rob Portman wanted to offer. In its new iteration, severely disabled workers who receive UI benefits would lose the same amount from their SSDI (Supplemental Security Disability Insurance) benefits.

This too was a pay-for Reid earlier offered — and borrowed from the President’s proposed budget. But it still “uniquely burdens” disabled workers, as Los Angeles Times columnist Michael Hiltzig says.

It also undermines the work incentive in SSDI. And it establishes a terrible precedent of raiding Social Security to fund other benefits programs, as the Consortium for Citizens with Disabilities warned several months ago.

The last part of the pay-for extends customs users fees through 2024. These are charges imposed for certain activities of the U.S. Customs Service, e.g., clearing merchandise for import.

So for better and worse, the Gang of Seven seems to have come round to a pay-for the Democratic majority could accept. But, as I said, it’s paired with some problematic “reforms” to the EUC program.

Politico reports that Reid may take another stab at passing an EUC bill this week. How far he’ll move to pick up the Republican votes he needs remains to be seen.

How far he should move is a daunting question.

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One Response to Next Round in Battle to Renew Long-Term Unemployment Benefits

  1. […] of this ongoing saga, the bipartisan Senate group agreed on some improvements to the bill I last wrote about. And the Senate will pass the bill today — perhaps before you read this — since […]

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