Effort To Dismantle Federal Unemployment Insurance Launched In Congress

The following was originally published at UnemployedWorkers.org [1]

Less than five months after approving a reauthorization of federally-funded unemployment insurance benefits as part of an agreement to extend tax cuts for those with the highest incomes, leading members of Congress are looking to break that agreement and dismantle the unemployment benefits program while leaving the tax cuts for the wealthy in place.

A bill introduced yesterday in the House by Rep. Dave Camp (R-MI), Chairman of the Ways and Means Committee, and in the Senate by Orrin Hatch (R-UT), Ranking Member of the Senate Finance Committee, would give states the ability to seize the federal funds allocated for unemployment benefits for the long-term jobless and use them for other purposes, including bailing out state government funds and substituting for employer unemployment taxes.

The measure would also allow states to reduce the number of weeks of federally-paid emergency and extended unemployment benefits, reduce the amounts paid or eliminate the benefits entirely.  One provision would allow a state to take the federal benefits funds and use them to finance its depleted unemployment trust fund rather than collect employer taxes, or to pay regular state benefits instead.

The bill is rather cynically titled the Jobs, Opportunity, Benefits and Services Act of 2011 (pdf [2])  – the “JOBS Act”.  They can call it whatever they want – it’s still just a vehicle to steal the guaranteed benefits from long-term unemployed job-seekers, those workers hurt the worst by the continuing unemployment crisis.  More than 4 million workers currently receive federal benefits through either the Emergency Unemployment Compensation (EUC) or Extended Benefits (EB) programs.  And, as Congressional research has shown, the nation’s unemployment insurance system has kept more than 3 million Americans from falling into poverty.

Federal unemployment insurance benefits are only available to workers who have lost their jobs through no fault of their own and have not been able to find work after exhausting their eligible weeks of regular state benefits, which in most states includes up to 26 weeks.  These federal benefits continue to be an essential means of support for those seeking new work in a job market that is barely growing fast enough to keep up with population-related increases in the labor force.  And while the unemployment rate is back at 9 percent nationally, the average duration of unemployment for jobless workers is nearly 9 months.

But these facts and the struggles of millions of unemployed workers seem to hold little sway with some lawmakers, who appear bent on shutting down unemployment insurance programs at every level.  They couch this proposal in language reminiscent of the welfare reform debate of the 1990s -- with lots of references to “flexibility”.  In a statement announcing the bill [3], Rep. Camp says it’s “about giving States the flexibility to spend current funds better,” and Rep. Geoff Davis (R-KY), a co-sponsor, says the bill will give “States the flexibility to make better choices about how to spend Federal unemployment benefit dollars.”

But unemployment insurance is not welfare – it’s an insurance program that guarantees benefits to eligible workers to help them sustain themselves and their families while they search for new employment.  It is those guaranteed benefits that this proposal would allow states to take away from jobless workers and use for things like bailing out state trust funds or substituting for employer taxes.

Other members of the House Ways and Means Committee were quick to blast the measure.  Ranking Member Rep. Sander Levin (D-MI) and Human Resources Subcommittee Ranking Member Lloyd Doggett (D-TX) issued a statement [4] saying the proposal “takes a hatchet” to the unemployment insurance program.  Rep. Levin said the bill’s supporters are “proposing to end this year’s guaranteed benefit for the long-term unemployed, just like they’ve proposed ending the guaranteed benefit for Medicare recipients.”

“This legislation takes money out of the pockets of the long-term unemployed and throws it to states, many of which have mismanaged their trust funds,” Levin said.

“This is a surprise assault on the jobless, which encourages the states to terminate assistance to 4 million long term unemployed Americans,” said Rep. Doggett.  “It represents only the latest attempt by Republicans to blame the unemployed for unemployment on the very day that ongoing unemployment claims had their largest weekly increase since last July.”

Unemployed workers are already facing attacks on benefits in a number of states.  Michigan and Missouri have recently cut their maximum state benefit weeks from 26 to 20.  Florida is close to enacting even harsher reductions in state benefits eligibility.  In addition, states including Tennessee, Wisconsin and North Carolina have already allowed federally-paid extended benefit programs to cease making payments.

It is true that many states now have insolvent unemployment insurance trust funds, and have taken on debt to the federal government by borrowing to pay state benefits.  And both the high numbers of jobless workers and the prolonged duration of the labor market downturn have contributed significantly to that insolvency.  But many of those states failed to adequately finance their trust funds during good economic times, and thus were not sufficiently prepared for the recession.  Some now look to use their current solvency issues to go after the very benefits that the unemployment insurance system is there to provide – as the newly-proposed “JOBS Act” would encourage them to do.

Attacking unemployment benefits will not restore solvency to unemployment trust funds, or solve the issues relating to state debts and employer taxes.  A bill introduced [5] by Senators Dick Durbin (D-IL), Jack Reed (D-RI) and Sherrod Brown (D-OH) – the Unemployment Insurance Solvency Act – would address those issues, allowing states to waive interest payments for two years, averting immediate tax increases for employers, and maintaining benefits for jobless workers.

Meanwhile, with the introduction of the benefit-robbing “JOBS Act” the assault on unemployed workers by some in Congress has achieved a shocking new low.  By seeking to break the agreement to continue federal unemployment benefits, allowing states to dismantle the federal program and steal unemployment benefits from jobless workers -- while maintaining the tax cuts for the wealthy -- some lawmakers are turning ‘trickle-down’ pseudo-economics into sado-economics.

Call your Representative and your Senators in Congress toll-free at 888-245-0215.  Tell them to oppose Rep. Camp’s and Sen. Hatch’s bill to dismantle the federal unemployment insurance program.  Tell them to oppose stealing benefits from unemployed workers.