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Extension of Unemployment Benefits & Payroll Tax Reduction

On February 17, both the House and the Senate passed H.R. 3630, a bill to extend, until December 31, 2012:

  • unemployment benefits for the long-term unemployed,
  • the payroll tax reduction for workers,
  • elimination of the drastic cut in the repayment rate to doctors who treat Medicare patients, and

H.R.3630 also extends funding for Temporary Assistance for Needy Families (TANF); however, only through September 30, 2012.  This requires that advocacy will be needed on TANF throughout the spring and summer.

Unemployment Benefits

The extension of benefits to the long-term unemployed is critical to the economy, as well as to the individual households affected. The previous emergency extension had allowed benefits to continue for up to 99 weeks. However, this new extension cuts the maximum number of weeks to 63 weeks (or 73 in states with an unemployment rate above 9%). NETWORK feels that we have had success at two levels: there is a continued extension, and the punitive elements in the House version were not adopted.

Elements of the House plan would have limited payments to 59 weeks, included mandated drug testing and requiring recipients of benefits to have a high school diploma or its equivalency, or be in an educational program to meet this need. In the final bill, drug testing is allowed, if states choose, only where the person lost work due to a drug offense, or the individual’s work requires such testing.

Up to ten states may be granted waivers to divert the federal funding to programs which support re-employment, reducing the funding available to worker benefits in the state. This is, however, an improvement over the House plan to allow an additional ten states to divert funds each of the next three years.

There is a federal mandate, already in place in most states, that beneficiaries of UI are engaged in seeking work.  An additional one billion dollars is allocated for reemployment services and assessment for reemployment, both of which will contribute to lowering the unemployment rate where the resources are used. Part of this funding will also support “work-share” program grants, which will help employers retain workers.

Unemployment insurance is one of the most cost-effective programs we have to boost the recovery.  Workers require fewer other safety net supports, and will be supporting the economy with purchases such as food, clothing and gasoline. 

Without the extension, the 26 weeks of benefits provided by states would h