Introduced by House Ways and Means Committee Chairman Rep. David Camp (MI-04) last Thursday and undergoing "mark-up" today, the bill would give states flexibility over how they spend federal funds intended for emergency unemployment compensation (EUC) and the extended benefits (EB) program. Congress passed those to ease the situation for millions of workers who have been unable to find work after their regular state benefits expire. Under the act, states could still spend the money to compensate long-term unemployed if they wished, or they could cut off those checks and pay off the debt many of them owe to federal unemployment trust funds, cover the cost of job search assistance and job training or use the money for other purposes.
Given the recent moves in Florida and other states to cut back on the unemployment benefits they provide, it's not hard to imagine how this would go down in many places.
What the legislation actually amounts to is yet another attack on the American working class. In the words of Democratic Caucus Chairman John Larson:
"It doesn't make an awful lot of sense to throw them out in the cold and not have them be able to pay their taxes, buy their food, pay their rent," Larson told reporters in the Capitol. "When we peel away the veneer of what the proposal is—a.k.a. we're going to reduce the deficit—really what we find here is an ending of the social compact between the people and their government." …[House Minority Whip Steny Hoyer said] "They are referring to one of their bills on unemployment – to end benefits for long-term unemployment, taking away the assistance to 4 million people who are going to run out of unemployment benefits – they are calling that the JOBS Act. … I am very interested to see how eliminating unemployment insurance is going to be a jobs bill."
Since the unemployment compensation program was set up during the New Deal, states have always paid for the first 26 weeks of benefits, these being funded by payroll taxes. That half-year of compensation is typically bolstered during economic downtowns by Congress, which funds additional weeks of benefits. Currently, in half the states, because their unemployment rates have exceeded a trigger level, that extra aid amounts to an unprecedented 53 weeks through EUC and 20 more weeks through EB.
But because jobless rates have been so high for so long, unemployment trust funds are broke in 30 states. To cover the shortfall, states have borrowed from the federal government to pay for those first 26 weeks of benefits. They now owe nearly $50 billion to the feds. A bill to knock off the interest due on those debts has stalled in Congress. Paying off the principal will be done by an increase in federal payroll taxes.
Camp and his JOBS Act co-sponsors would allow states to stop offering the extra weeks of aid under EUC and EB and use $31 billion in block-grant money to pay off their federal debt incurred by the program instead. That would, in turn, amount to a tax cut for employers. Or states could spend the money in other ways.
Some 4 million Americans are already slated to lose their jobless benefits this year. Already, extended benefits have expired in North Carolina, Tennessee and Wisconsin. Just three days from now, they will expire in Alaska, Alabama and Kansas. In June, they will expire in Arizona, Pennsylvania and Washington, D.C. That all adds to the accumulation of so-called 99ers, those workers who have exhausted all their state and federal unemployment benefits.
But if the JOBS Act passed, it would give states the ability to cut off benefit checks long before the 99 weeks have expired. This at a time when the jobless rate is at a stubbornly high 9 percent and hiring, while improving, is still moving far too slowly to quickly absorb the millions who are without work and others who are just entering the labor force.
According to the Congressional Budget, because of the multiplier effect of putting this unemployment compensation money into the hands of those who need it, the JOBS Act could eliminate $40 billion in economic activity. That would mean a loss of 322,000 jobs among those who now have work. As the Economic Policy Institute says, "the JOBS Act is a job loser, not a creator."
In other words, what's proposed isn't a jobs bill, but a screw-the-jobless bill, something Republicans have been especially proficient at.
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