Next Round in Battle to Renew Long-Term Unemployment Benefits

March 10, 2014

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.

Long-Term Jobless Veteran Asks the Million Dollar Question

January 30, 2014

“I’ve served my country, honorable discharge …. I’ve done everything right. College, school, no crime, no record. Pay my taxes. Make sure my daughter went to school … Got her in college.

“And I’m sitting here struggling. I’m now ready to take a street sweeper job if they would offer it to me. So I’m asking you the million dollar question. What am I supposed to do right now to keep a roof over my head, food in my stomach, clothes on my back, car insurance paid?”

The desperate woman whom I’m quoting was addressing a spokesperson for Senate Minority Leader Mitch McConnell.

She was part of a group of advocates and jobless workers who were delivering petitions, representing some half million signatures, urging the top Republican leaders in both the House and Senate to let Congress members vote on a bill to renew Emergency Unemployment Compensation.

McConnell’s spokesperson says to her, “I can only tell you what we do here in the Senate. I have no control over your life.”

But his boss sure does. If he hadn’t locked horns with Senate Majority Leader Harry Reid, a bill renewing EUC would now be awaiting an uncertain future in the House.

As things stand, more than 1.6 million long-term jobless workers and their families may have no source of cash income. Nearly 72,000 more are likely to lose their benefits by the end of this week. And no one, to my knowledge, is predicting an end to the stalemate.

Majority Leader Reid offered the Republicans two options. The first, which had earlier gotten enough Republican votes to open debate, would have renewed EUC for three months, back-dated to when they expired.

Costs for this version — about $6.4 million over 10 years* (less than 0.014% of the federal budget) — were not offset.

Well, Republicans insisted on an offset. The second version, which would have renewed EUC through November, provided one — and cut back on the number of weeks the program would cover.

Republicans didn’t like this bill either. They wanted to propose other offsets in the form of amendments, but only for the three-month, stopgap bill.

Reid limited the number of amendments they could offer — presumably so they couldn’t tie up the process indefinitely.

He also insisted that any amendment would have to pass with 60 votes. McConnell understandably objected because 15 Democrats would have had to vote in favor, assuming all Republicans did.

So Republicans wouldn’t provide the votes needed to move forward on either bill.

It’s hard to know whether they’re sincerely trying to get a bill they could vote for or, as Washington Post blogger Greg Sargent has suggested, reframing the debate as an issue of fiscal responsibility so as to mask their party’s ideological hostility to any EUC renewal.

What’s not hard to know is that some of the amendments they’d proposed seem like what are commonly called poison pills, i.e., amendments deliberately designed to repel a bill’s supporters. More about these in a separate post.

Arthur Delaney at Huffington Post reports that Senator Jack Reed, who’s been leading the charge for EUC renewal, has been talking with “a handful of Republicans” about a pay-for “that would make them happy.”

They may strike a deal, but like as not, it will be for three months — until the end of March, assuming it’s retroactive. The Republican majority probably won’t like it. Some Democrats may not either, considering what would make some in that handful happy.

So will we have another kerfuffle over amendments? And if not, what are the prospects in the House, when Speaker John Boehner has put additional conditions on a renewal?

I can’t help feeling that the desperate woman and all the other jobless workers who’ve got the same million dollar question are pawns in a partisan strategy that has little or nothing to do with fiscal responsibility.

* The Congressional Budget Office conventionally projects costs over a 10-year period and takes account of any expected revenue increases that a measure like this would produce. The estimate thus does not mean that the federal government would continue to incur costs. It does, however, reflect some out-year revenue increases.

Unemployment Benefits Battle Lost, But Not the War

December 27, 2013

The Emergency Unemployment Compensation program ends tomorrow, making for a very unhappy New Year for about 1.3 million jobless workers.

These are workers who qualify for unemployment insurance, but have been jobless longer than their regular state UI programs cover. Over the course of the year, an additional 3.5 million will be left in the lurch unless Congress belatedly renews the program.

And it’s going to be even harder for them to find work precisely because they won’t have nearly as much money to spend. Not that EUC benefits are generous, mind you — on average, only $289 a week now.

But without the spending they enable, the economy will have 240,000 fewer jobs, according to the U.S. Department of Labor and the President’s Council of Economic Advisers. The Economic Policy Institute puts the loss at 310,000 jobs.

The DOL/White House experts have produced estimates of the number of jobless workers affected for each state and the District of Columbia and also for job that would be saved.

So we learn that 18,200 jobless workers in the District will need and not have EUC benefits in the upcoming year. And there will be 993 fewer jobs than there would be if Congress passed an extension.

Not a happy prospect for a city where last month’s unemployment rate was 8.6% — and more than twice as high in Ward 8, which was in deep troubles long before the recession began.

The White House and Democrats in Congress will try again to get the EUC program extended. Republicans, at this point, don’t seem interested, though the National Journal cites a few exceptions, all but one of them hedged.

For some, there’s an ideological aversion to safety net programs — except perhaps those that are highly targeted and very short term.

Thus we have Senator Rand Paul explaining that extending EUC would be “a disservice” to jobless workers because “when you allow people to be on unemployment insurance for 99 weeks [as is no longer possible], you’re causing them to become part of this perpetual unemployed group in our economy.”

The larger sticking point, however, is the cost of the extension, estimated by the Congressional Budget Office at $25.2 billion, once the revenue boost is factored in.

House Speaker John Boehner has said he’ll consider an EUC extension plan “as long as it is paid for and … there are other efforts that will help get our economy going once again.” What those might be we’re left to guess.

Over on the Senate side, Majority Leader Harry Reid says he’ll try to get a vote on an extension bill on January 6 or 7. This would be a stopgap, three-month measure, without a pay-for. The Democrats claim, as they have in the past, that no offset is needed because the bill is emergency legislation, which, by definition, requires no offset.

Needless to say, getting enough Republicans to allow a substantive vote on the bill won’t be easy. Finding an offset may not be either, now that the budget deal has tapped some of the likely sources — or rather, finding an offset that Republicans will accept.

Americans for Tax Fairness notes that Congress could pay for the extension — and have lots of money left over — by closing just one corporate tax loophole.

But where there’s a will, there’s a way. And in this case, the will depends on what members of Congress are experiencing now that they’re home. Jobless workers in their faces. Stories on the evening news. Op-eds in hometown newspapers. Etc.

We need a big push now. And it’s a comfort to know that advocacy organizations are working hard on this.

Another Anxious Holiday Season for Jobless Workers

November 21, 2013

The holiday shopping season is upon us, early as it is. But I doubt many jobless workers and their families will be stuffing their shopping bags with wished-for gifts.

Only about 3.9 million of the workers are receiving unemployment insurance benefits, though 11.3 million of them were actively looking for jobs and so counted among the unemployed last month.

And a third of the more fortunate will lose their benefits just three days after Christmas unless Congress renews the Emergency Unemployment Compensation program, the National Employment Law Project warns.

An additional 850,000 or so workers will exhaust their regular state UI benefits by the end of March and have no EUC to turn to. The number could swell to 4.8 million by the end of 2014, says the top economist at the White House.

If past is prologue, nearly half the workers who receive state UI benefits will still be jobless when they come to end of the weeks their state’s program covers — 26 in most states, but considerably fewer in some.

The benefits are far from generous — on average, $269 a week. But UI benefits generally were enough to keep 2.4 million people out of poverty last year, before sequestration took a bite out of EUC.

Forecasters for the Federal Reserve Bank of Philadelphia expect the rate next year to average out at 7.1%. Today, it’s 8% or higher in 16 states and the District of Columbia. So it’s hardly time to pull the plug.

More importantly, as the Economic Policy Institute argues, the job market is scarcely better than it was a year ago, when you look at the number of job openings in light of the number of job seekers.

The unemployment rate is lower mainly because people have given up looking or decided not to start because the odds of finding a job are about one in three.

Some of the nearly 6.1 million “missing workers,” i.e. those who’d be employed or looking if the labor market were healthy, may be getting education or training credentials that will improve their unemployment prospects.

But, as the Urban Institute says, other stay-outs and drop-outs, especially those who are older, may have a hard time getting work even when there’s more available. A harder time, of course, if there isn’t.

EPI figures that extending the EUC program would create and/or preserve an estimated 310,000 jobs because long-term jobless workers, most of whom are “cash-strapped,” will spend their money on basic necessities.

The money that would flow to local businesses would support not only jobs there, but in the businesses that serve and supply them. So we’d have their workers paying taxes — and more tax revenues from the businesses too.

A large portion of the cost of extending the EUC program would thus be offset by the revenues, plus some savings in other safety net programs.

Contrariwise, failure to extend it would put a damper on our already anemic economic growth and (horrors!) perhaps slow the decline in the short-term deficit.

And all to save an effective $11.1 billion — 0.3% of next year’s federal budget, according to the nifty calculator the Center for Economic and Policy Research provides.

Democrats in Congress reportedly hope to fold an EUC extension into the deal that’s currently being negotiated to prevent another government shutdown, while also replacing — or at least, easing — the cuts forced by sequestration.

House Republicans apparently want no such thing — or so a highly inflammatory post on the Ways and Means Committee site indicates.

Politico, however, reports that Republicans on the budget conference committee “would consider” adding an EUC extension “as a bargaining chip.” Also that the chances of a bipartisan deal are maybe a bit better than 50-50.

So we could be looking at another of those last-minute kick-the-can-down-the-road deals. What that would mean for the EUC program is a question mark.

But, as George Zornick at The Nation observes, “many past renewals have happened during crisis standoffs.” The next, should it materialize, would come to a head in mid-January.

It would be ever so much better for all concerned if Congress delivered balanced relief from sequestration — and relief for long-term jobless workers — well before Christmas.


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