H.R. 3548: Unemployment Compensation Extension Act

H.R. 3548

Unemployment Compensation Extension Act

Sponsor
Rep. Jim McDermott

Date
September 22, 2009 (111th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

H.R. 3548 is being considered under suspension of the rules, requiring a two-thirds vote for passage. The legislation was introduced by Rep. Jim McDermott (D-WA) on September 10, 2009.

Bill Summary

H.R. 3548 would extend unemployment benefits for an additional 13 weeks for individuals living in States with total unemployment rates above 8.5 percent, or States where the insured unemployment rate exceeds 6 percent and has risen by at least 20 percent compared to the two previous calendar years. The bill would also extend an existing 0.2 percent Federal Unemployment Tax Act (FUTA) surtax through 2010, and expand wage reporting requirements on existing databases of new hires, in order to finance the extension.

Background

During economic downturns, Congress has acted to extend unemployment benefits beyond the statutory requirement of 26 weeks.  Last year's wartime supplemental (P.L. 110-252) provided a new program of extended unemployment compensation benefits for up to 13 weeks (39 weeks total).  Legislation signed by President Bush in November 2008 (P.L. 110-449) extended the period of extended unemployment compensation from 13 to 20 weeks (46 weeks total), with an additional 13 weeks (59 weeks total) available in high unemployment States.  Under current law, States with unemployment rates of over 6 percent, or insured unemployment rates of over 4 percent, qualify as "high unemployment" States for purposes of the additional 13 weeks of benefits.  According to the Department of Labor, 42 States and the District of Columbia qualify as "high unemployment" States for purposes of the additional 13 weeks of unemployment compensation as of September 20, 2009.

 

In addition, the "stimulus" bill passed in February (P.L. 111-5), in addition to shifting the financing for extended unemployment compensation benefits to the Treasury (as opposed to the Unemployment Trust Fund), and increasing all unemployment benefits by $25 per week through the end of 2009, effectively nationalized for the first time the Federal/State extended benefit program authorized in permanent law. That program has since its inception in the 1970s paid extended benefits in high unemployment States using 50 percent State funds.  Extended benefits last up to 20 weeks, meaning the total maximum duration of 100 percent federally funded extended benefits today is a record 53 weeks-up to 33 weeks under the "temporary" program and another 20 weeks under the "permanent" program, which is currently entirely federally funded.  To this H.R. 3548 would add up to another 13 weeks of Federal extended benefits, for a proposed grand total of 66 weeks of federal benefits, or 92 weeks (counting 26 weeks of State unemployment benefits) available nationwide.  

 

State-level unemployment data released last week indicate that as of August 2009, 29 States (including Puerto Rico and the District of Columbia) have unemployment rates in excess of 8.5 percent; workers in these States would be eligible for the additional 13 weeks of extended unemployment compensation benefits, for up to 92 weeks in total federal and State benefits.  Given that H.R. 3548 would extend unemployment benefits in many States for a period totaling nearly two full years, some Members may echo the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would "create undesirable incentives for individuals to delay returning to work.  That would lower earnings and total spending."

 

Members may also note that H.R. 3548 likely will not represent the full scope of expected increases in federal unemployment spending.  The existing federal extended unemployment compensation program expires December 26, 2009; legislation to extend the program beyond 2009 could cost $70 billion-or more, if additional weeks of extended unemployment benefits are added to the program.

Cost

A formal Congressional Budget Office was not available at press time; however, a preliminary CBO estimate indicated the bill would spend approximately $1.4 billion, paid for by an extension of the FUTA surtax.