Up to 1.2 million workers will prematurely lose benefits by the end of March due to the Senate’s inability to pass an extension of unemployment insurance (UI) benefits and COBRA health coverage which expired February 28th.  Efforts by Senate Democratic leaders to pass the short-term extension of UI and COBRA through April 5 that had passed the House on a voice vote were thwarted by Senator Jim Bunning (KY-R).  Bunning insisted that $10 billion in unspent money from the American Recovery and Reinvestment Act of 2009 (ARRA) be used to offset the cost of the bill which also included extension of some highway programs, the national flood insurance program, and a small business loan guarantee program.  One Senator can stymie Senate action by refusing to agree to expedited procedures.  Without “unanimous consent” it generally takes at least a week to enact legislation under Senate rules.  The Senate will again attempt to pass an extension of UI and COBRA in its next jobs agenda bill (see below).  With each day that passes, more jobless workers who should have received UI benefits will have to go without.  (For estimates of the numbers who will lose benefits by state, see the analysis by the National Employment Law Project.)
Last week the Senate was successful in passing a modest $15 billion jobs bill that includes elements from the Hiring Incentives to Restore Employment Act (HIRE) drafted by Finance Committee Chairman Max Baucus (MT-D) and Charles Grassley (IA-R).  Negotiations to bring the entire bill to the floor broke down when Republicans demanded a date-certain vote on a more generous estate tax.  Five Republican Senators (Bond-MO, Brown-MA, Collins-ME, Snowe-ME, Voinovich-OH) broke with their party to join all Democrats except Ben Nelson (NE) in passing 62-30 a procedural hurdle which ended debate and allowed the vote on final passage.  Eight more Republicans who were unwilling to break ranks on the procedural vote, but did not want to be against jobs back home, joined in supporting the bill which ultimately passed by a wide margin (70-28).

A key provision in the bill exempts businesses that hire workers who have been unemployed for at least 60 days from paying the 6.2 percent Social Security payroll tax through December 2010 and gives them an additional $1,000 credit for each new worker who remains on the job for a full year. The bill also extends federal highway and mass transit funds through the end of the year, accelerates expense deductions for small businesses, and extends the “Build America” bond program, which lowers borrowing costs for state and local governments to finance infrastructure projects.

The House, which passed the more robust $154 billion Jobs for Main Street Act, H.R. 2847, in December (see Human Needs Report for December 23, 2009), seems reluctantly inclined to bring the Senate bill to the floor for a vote.  They must first overcome concerns within various segments of their caucus.  Some are unhappy that the formula for the distribution of highway funds favors a small number of states; others worry that the tax credit for businesses will, at best, result in only several hundred thousand new jobs in an economy that has lost 8.4 million jobs since the downturn began in December 2007; and still others are disinclined to vote for the bill which would require the House’s pay-as-you-go budget rule to be waived.

Senate Democrats are gearing up for the second in a series of bills in their jobs agenda, although many economists are skeptical that the items likely to be included have the best job-creating potential.  This bill is expected to include many of the remaining elements from the HIRE Act, including postponement of the scheduled cut in Medicare payments to doctors and a retroactive extension of dozens of tax provisions including the research and development credit, deductibility for state sales taxes, and energy-related credits.  In recent years this ‘extenders’ package has been renewed annually but in 2009 was allowed to lapse on December 31.   Democratic leaders are planning to include an extension of UI and COBRA through the end of 2010 (HIRE extends them to May 31, 2010) and may add aid to cash-strapped states to help offset their Medicaid costs (not included in HIRE).  Advocates are urging Senate leaders to include more direct job creation programs like money for the summer jobs program for youth (which currently has no funds for the upcoming summer), for direct public service jobs, and for the Emergency TANF Fund.  The latter was funded at $5 billion from ARRA and is being used by states to provide subsidized jobs to at least 100,000 low-income parents and basic assistance to poor families with children hit hard by the recession.  The Emergency Fund is set to expire on September 30, 2010.

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