Assault on the Safety Net Continues

May 13, 2011

By Elizabeth Lower-Basch

In December, Congress and President Obama came to a bipartisan compromise, continuing extended unemployment insurance through the end of 2011 and extending tax cuts for two years.  However, this week, the Ways and Means Committee voted along party lines to undermine that compromise, and allow states to raid benefits for the long-term unemployed in order to shore up their trust funds and provide tax breaks to corporations.

H.R. 1745, introduced by Rep. Dave Camp (R-MI), the Chairman of the Way and Means Committee, would provide states with a lump sum amount equal to the share of extended unemployment benefits that are scheduled to be paid to workers in their states for the balance of the year.  States would have the option to use these funds to pay regular unemployment benefits, to repay the funds they have borrowed to pay benefits in recent years, or to provide work-related activities to unemployed workers.   State legislatures will be under extreme pressure from business lobbyists to use these funds to lower taxes.  This will provide short-term fixes - at the expense of the workers who are suffering the most during the recession - without making any reforms to the broken financing systems that contributed to the insolvency of the unemployment trust funds in the first place.

When the committee reviewed the bill, many members spoke to the fact that less educated workers have been particularly affected by unemployment during this recession, and the need for increased skill training and reemployment services, including subsidized employment, for this population.   If this bill were enacted, states could opt to use some or all of the extended benefits funds for such services.  CLASP feels strongly about the need for these services, but does not believe that it is appropriate to fund them by taking money away from the unemployment benefits earned by workers. 

This bill is yet another instance of a recent trend in Congress to pit essential programs against each other, and to distance themselves from the real human cost of budget cuts by forcing state legislatures to choose which specific activities to fund within a spending cap.  While this particular bill is highly unlikely to pass the Senate, there is a real danger that the Senate will agree to some version of an overall spending cap.

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