CHN: Clock is Running Down on Extending Unemployment Benefits
Congress has three weeks to enact a package that includes an extension of the federal unemployment insurance (UI) program and COBRA health insurance benefits to avoid letting them expire for the third time in as many months. After allowing the programs to expire on February 28th and again on April 5th because of Senate Republican opposition, retroactive extensions were passed. The latest expiration, which lasted until April 15th, caused an interruption in UI benefits for approximately 400,000 workers. The latest temporary extensions expire on June 2nd. If the bill is enacted as written, this time UI and COBRA law will be extended through the end of 2010.
The UI program has been critical in sustaining millions of families in the worst job market in decades. The latest monthly jobs report showed that an estimated 290,000 new jobs were created in April. However, unemployment rose from 9.7 to 9.9 percent as more workers reentered the job market. There are 15.3 million unemployed workers and a growing number of those, 6.7 million, have been unemployed for more than 6 months. Those workers are faced with the daunting task of finding work in a market where there are 5.5 unemployed workers for every job opening.
The House and Senate are working to reconcile differences in the American Workers, State, and Business Relief Act of 2010, HR 4213, also referred to as the ‘extenders’ bill, which both chambers have passed. The core provisions would renew a group of dozens of tax cuts that expired at the end of last year including the research and development tax credit, the state sales tax deduction and tax credits for the production of biodiesel and renewable sources of fuel. The bill will almost certainly include extensions of UI and COBRA and other jobs-related provisions.
Advocates are also working to ensure inclusion in the bill an extension of the TANF Emergency Fund, funding for the summer jobs for youth and a 6-month extension of the enhanced Federal Medical Assistance Percentage (FMAP). The TANF Emergency Fund, first funded in the American Recovery and Reinvestment Act (ARRA) that passed in February 2009, provides funds to states to support a range of subsidized jobs for low-income families. The 27 states and the District of Columbia that are utilizing the programs have plans to provide about 180,000 jobs by September 30, 2010, the current program deadline. Additional states are interested in using the funds to create even more jobs if funding is extended. ARRA also provided funding for the Summer Youth Employment Initiative which provided 317,000 young workers with jobs in 2009. Funding for the summer youth program is critical because the unemployment rate among young people ages 16-19 is 25.4 percent, the highest of any age category.
FMAP received $87 billion in ARRA funding and is set to expire December 31, 2010. This infusion of federal funding is providing much-needed relief to states in order to meet the elevated demand for Medicaid services. Failure to add funding for FMAP could force states to make severe cuts in services to beneficiaries and in payments to Medicaid providers, or, if Medicaid is spared, to cut deeply into other state services. The Center on Budget and Policy Priorities estimated that without an extension of state fiscal relief, state spending cuts could mean job loss of up to 900,000 in both the public and private sectors nationwide.
Under the guise of deficit reduction, pressure has increased of late by more conservative members of Congress to pay for extensions of safety net programs like UI that have typically been considered emergency funding. Congressional leaders are now negotiating which of the elements in the jobs and tax package will need to be paid for and how to pay for them.