Senate Finance Committee Releases Job Creation Legislation
The Senate Finance Committee on June 8 released a Senate substitute amendment for the American Jobs and Closing Tax Loopholes Act of 2010 (HR 4213), or the "extenders" bill, which the House passed on May 28.
Like the House bill, the Senate version includes critical provisions that would stimulate the economy and, importantly, aid low-income families who have been hardest hit by the recent economic downturn.
The Senate bill includes some of the same measures in the House bill, including extending the TANF Emergency Fund for another year, funding for summer jobs for youth, and extending unemployment insurance benefits for the long-term unemployed. The Senate bill goes further than the House bill, though, and continues the Recovery Act increase in the share of Medicaid and child welfare costs paid by the federal government (called FMAP). The House cut these provisions from its final version. Unfortunately, the Senate bill does not restore the extension to health insurance subsidies for unemployed workers, which the House also dropped from its bill.
Provisions in the bill that are critical for low-income families include:
- TANF Emergency Fund: Created by the American Recovery and Reinvestment Act, the Temporary Assistance for Needy Families (TANF) Emergency Fund provided $5 billion for fiscal years 2009 and 2010 to assist states in expanding services during the recession. States that increased spending on assistance, short-term non-recurrent benefits, or subsidized employment last year or during FY 2010 can receive 80 percent reimbursement of the increased costs.
The Emergency Fund, however, is scheduled to expire on September 30, 2010. Both versions of the American Jobs bill would provide $2.5 billion to extend the TANF Emergency Fund for another year. States already have plans to create more than 180,000 jobs - almost all of which are in the private sector -- before the TANF Emergency Fund expires. These jobs would be lost without the Emergency Fund. Extending the TANF Emergency Fund is critical for struggling families as well as for states trying to create jobs for vulnerable populations.
- Jobs for Youth: Youth -- ages 16 to 19 -- make up nearly a third of people currently unemployed across the country. According to the Bureau of Labor Statistics (BLS), currently only 25 percent of teens between 16 and 19 are employed, down from 37 percent just five years ago. For black teens, that rate is only 16 percent. These young people critically need early work experience to develop strong work ethics and appropriate workplace skills, and earn more in later years. Moreover, disadvantaged teens who work are more likely to remain in high school than their peers who do not work.
Like the version passed by the House, the Senate version of the American Jobs bill would provide funding to support over 300,000 jobs for youth ages 16 to 21 through summer employment programs. Last summer, the Youth Workforce System under the Workforce Investment Act (WIA), through American Recovery and Reinvestment Act investments, put over 355,000 youth to work. Funding jobs for youth will help communities build on this success, provide youth with income to help support their families during tough economic times, and fuel demand in local economies through their spending.
- Unemployment Insurance: Although the job market has shown some signs of recovery, unemployment remains at generational highs. Further, long-term unemployment is at record levels, with 45.9 percent of unemployed workers being out of work for six months or more in April 2010. The economy has created jobs for the last three months, but even if the current pace of jobs creation is sustained, recovering the millions of jobs lost throughout 2008 and 2009 will take years.
Both versions of the American Jobs bill would allow states to continue current levels of Unemployment Insurance benefits for the long-term unemployed through November of this year. This extension is crucial so workers can avoid delays in unemployment insurance benefits. This year, Congress has repeatedly passed short-term extensions of unemployment insurance benefits, but votes on these short-term extensions have been frequently postponed, resulting in harmful delays. While the former American Jobs bill provided an extension to the end of the calendar year, even this five-month extension would help protect these crucial benefits from the whims of the political process, ensuring unemployed workers have needed support as they continue to search for jobs.
- Medicaid and Child Welfare: The Senate version (but not the version passed by the House) also provides a six-month extension of the Recovery Act increase in the share of Medicaid and child welfare costs paid by the federal government, taking the increase to the end of most states' fiscal years. This extension would provide critical assistance to states facing budget shortfalls, helping avoid major cuts in needed services and layoffs of state and local employees.
The temporary spending in the legislation would help stimulate the economy as well as aid Americans who have been hardest hit by the recession. Failing to provide needed funding for these programs would risk crushing the fragile recovery that has begun.
Now that the Finance Committee has released its substitute amendment, the bill must receive 60 votes for cloture and to waive PayGo rules for the Unemployment Insurance extension. Once the bill clears the Senate, it will either have to be conferenced with the House version or must pass the House unchanged. Unemployment insurance extensions expired on June 2, and struggling workers who are searching for jobs cannot afford gaps in UI payments. The Senate should thus take up the bill as soon as possible.
Read CLASP's letter to Speaker Pelosi supporting the bill.