Senator Jack Reed (D-RI) has proposed a new amendment to S 1845 that would extend EUC through March 31st and seek to “pay for” the extension largely through a pension smoothing proposal that would permit employers to reduce pension contributions, resulting in money available to be spent in the economy and presumably increase tax revenue. Apparently this “pay for” has been accepted before.
There is also a new amendment that would prohibit the payment of unemployment compensation (UI,EB or EUC) to individuals with annual adjusted gross income of $1 million or more in the year prior to their applying for unemployment compensation. This is similar to an earlier proposal from Senator Coburn (R-OK) and includes not only the prohibition against making such payments but no federal funding for administration of the provision. The provision would affect a very small number of applicants but provides some savings.
The continuing UI related issues include:
1) The non-reduction provision would be continued except for a waiver for state legislation enacted before December 1, 2013 designed to enable North Carolina to agree to pay EUC for weeks beginning December 29, 2013 and receive federal reimbursement.
If there is an EUC extension the non-reduction provision should be deleted entirely. It already caused problems for Indiana, Arkansas, Pennsylvania and Rhode Island in 2012 in addition to North Carolina. If this idea of restricting states from modifying benefits in UI solvency legislation continues it will also restrict the measures that may be taken by 16 states to eliminate UI loan debt.
2) The bill would have a retroactive effect to enable EUC claims for weeks going back to weeks after December 28, 2013.
The effective date of any legislation at this point should be for weeks after enactment and not retroactive. Since December 28th many of the EUC claimants have gone back to work, retired, gone on disability, returned to school and/or decided not to continue claiming. Many of them may have filed for and become eligible for regular state unemployment compensation. It is bad policy to try to go back more than a month to try to reconstruct applications, weeks claimed, etc. and verify that individuals were able to work, available to work and actively seeking work. There will be many erroneous payments and audit findings as a result of the retroactive effective date. By the time a provision is enacted by both houses and signed into law there would be very few weeks yet to be claimed through March 31st. The effect would be to provide a disincentive for individuals to accept lesser paying jobs that are available as they wait for their multi-week check of benefits just when they should be increasing work search efforts and making themselves more available for jobs.
At this point the new amendment proposal has been set for a vote on Thursday this week but it is not clear whether Senator Reid will permit any amendments on the floor and not clear whether there will be 60 votes to permit the Senate to proceed to vote on the amended version of S 1845. Even if the Senate acts the bill faces an uncertain future in the House. House Ways and Means Chairman Camp has indicated that he believes EUC should be permitted to end. Speaker Boehner has conditioned consideration of an EUC extension on its being paid for and that it is combined with job creation initiatives.
UWC previously urged Congress to repeal the non-reduction provision and to minimize the administrative complexity of an EUC extension. We continue to discuss these issues with congressional staff.