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A Bill for the 99ers (and Other Exhaustees)

August 5, 2010 - by Donny Shaw

As announced last night on the Ed Schultz show, Sen. Debbie Ann Stabenow [D, MI] has introduced legislation that would provide additional weeks of unemployment benefits payments for people who have reached the end of what is currently available to them in their state. The bill, which she’s calling it the Americans Want to Work Act, would also extend and strengthen tax credits for employers that hire people who have been out of work for some time.

The bill had 9 original co-sponsors as it was introduced, including the three most powerful Democrats in the Senate — Senate Majority Leader Harry Reid [D, NV], Democratic Whip Dick Durbin [D, IL] and Democratic Caucus Vice-Chair Chuck Schumer [D, NY].

This is, obviously, good news for the millions of unemployed Americans who have exhausted all of the unemployment benefits available to them and to those who may exhaust their benefits in the future without having found work. And it’s not a second too soon. With people like Tim Geithner predicting that the unemployment rate will go up again before it goes down, it’s clear that jobs are becoming harder to find at the same time that people who lost their jobs in the scramble following the 2008 financial meltdown are reaching the end of their lifeline.

Noticeably missing from the bill is any kind of a plan to offset the deficit impact of the additional weeks of unemployment benefits and the business hiring incentives. As I noted Monday, support in Congress for extending unemployment insurance benefits without offsetting the costs has progressively weakened over the past couple years. The most recent round of extensions took more than a month for the Senate to pass and pushed them to what seemed like their absolute limit for unpaid-for extensions. Stabenow’s bill is different — it would add additional weeks, not extend the filing deadline for the existing tiers — but the same dynamics would almost certainly apply. I don’t know how this passes without a revenue plan.

Here’s the summary from Stabenow’s office (as the official legislative text has not yet been made available, this is about all we know):

Tier 5 – Unemployment Insurance

  • What it Does: Provides 20 weeks of additional unemployment insurance for states with 7.5% or higher unemployment. This tier will benefit the people who have exhausted all of their benefits.
  • Retroactive Eligibility: Would apply retroactively to everyone who has exhausted all of their previous tiers in recent months. However, benefits would not be paid retroactively. (Example – If you exhausted your benefits 3 months ago, you would be eligible to begin your Tier 5 at the date of enactment. You would not, however, be paid out for the 3 months in which you did not receive benefits. If you are going to exhaust your benefits in 2 weeks, you will move right onto Tier 5 and receive your 20 weeks).
  • Requirements: People who are unemployed still need to meet current UI law requirements such as job searches.

One Year Extension of the HIRE Act Payroll Tax Exemption & Incentives for Businesses to Hire the Hardest Hit Americans

  • HIRE Act Background: The HIRE Act, signed into law earlier this year, provides two new tax incentives for employers to hire unemployed workers. Under the HIRE Act, businesses that hire Americans who have been out of work for at least 60 days are exempt from paying their 6.2 percent share of Social Security payroll taxes for all new hires up to the FICA wage cap of $106,800. To promote long-term employment, the HIRE Act also provides an additional $1,000 general business tax credit for each worker retained for at least one year.
  • Americans Want to Work Act Provisions: The bill includes two key provisions that apply to all states:

    •  Extends the successful HIRE Act Payroll Tax Exemption for one year, through the end of 2011.
    • Doubles the general business tax credit, from $1,000 to $2,000, for businesses that hire (and retain for 52 weeks) someone who has exhausted all unemployment benefits. This is applicable to anyone who has exhausted all unemployment benefits or that is eligible for Tier 5. This would be effective at the date of enactment.
  • Evidence the HIRE Act Payroll Tax Exemption is Working: Recent reports from the Treasury Department show that from February to June of 2010, businesses hired approximately 5.6 million new workers who had been unemployed for eight weeks or more.  Businesses have already received potential tax savings of $10.4 billion ($6.2 billion in payroll tax reductions, $4.2 billion in tax credits) from the HIRE Act Payroll Tax Exemption.
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