Bill could end long-term benefits for jobless

May 12, 2011

States could end long-term benefits for laid-off workers and use the money to pay off federal loans for the unemployment benefits under legislation passed Wednesday in the House Ways and Means Committee.

States also could use the federal extended unemployment money to pay for federal tax increases on businesses or to start job creation programs. Michigan is to receive $1.3 billion this year from the federal government, which will distribute $31 billion nationally.

As a result of the prolonged recession, 29 states owe the federal government a total of $41.2 billion in outstanding loans for unemployment benefits. Michigan, which held the highest unemployment rate in the nation for nearly four years, owes nearly $3.2 billion and must start paying the bill Sept. 30.

The longer a state holds the debt, the higher the federal unemployment tax rate on businesses. Employers in 22 states will see their federal unemployment taxes go up this year. In Michigan, unemployment taxes on employers increases from 0.8 percent to 1.7 percent, according to Ways and Means Republicans.

U.S. Rep. Dave Camp, chairman of the Ways and Means Committee, is fighting criticism from Democrats the bill would batter the jobless in favor of helping corporations, and said he wants the unemployed to begin earning a paycheck. "But we can't do that if we are taxing the very men and women we're counting on to help create the jobs that so many are seeking," said Camp, R-Midland.

"Unemployment taxes are payroll taxes on jobs, plain and simple. And as they grow, these taxes on jobs are only making it harder for the millions of unemployed workers to get back to work."

The bill comes as the Michigan Legislature has cut state-funded unemployment benefits from 26 to 20 weeks starting in 2012. Missouri and Florida have also taken action to reduce benefits. Jobless qualify for up to 99 weeks of unemployment benefits; 73 of those are paid for by the federal government.

The committee's ranking member, Rep. Sander Levin, D-Royal Oak, chided Camp's name for the legislation: the Jobs, Opportunity, Benefits and Services Act of 2011 or JOBS act.

"Calling this a jobs bill is a cruel hoax … for the millions of Americans who could see their unemployment benefits disappear under the legislation, while seeing no new job opportunities," Levin said. "This callous legislation would end the guarantee of federal unemployment insurances for 4 million Americans" including 175,000 in Michigan..

The bill must pass the GOP-controlled House, but would face an uphill battle in the Democrat-led Senate and White House.