Fifty-three House Democrats on Thursday proposed a one-year extension of federal unemployment benefits and eliminating interest payments of about $1.5 billion that states will soon be required to pay the federal government for loans taken out to help maintain unemployment benefits.
"Congress has never allowed emergency unemployment benefits to expire when the unemployment rate is anywhere close to its current level of 9.1 percent," said Rep. Lloyd Doggett (D-Texas), the chief sponsor of the bill. "If Congress fails to act, more than 2 million Americans who lost their jobs will lose their unemployment coverage by the middle of February, including 124,000 in my home state of Texas. More than 6 million will lose benefits during 2012."
Under the bill, H.R. 3346, the Emergency Unemployment Compensation program would continue through 2012, as would the Extended Benefits program. The bill doesn't estimate how much these extensions would cost.
The bill would also address what many lawmakers say is a looming problem related to interest payments that states owe the federal government. The 2009 stimulus bill gave states the ability to borrow from the Federal Unemployment Trust Fund to help maintain their unemployment benefits program without paying interest, but the exemption from interest payments was temporary.
The legislation would eliminate the need for states to pay interest on these loans as long as they continue to maintain their current unemployment benefits programs.
States have borrowed billions under the 2009 law — 28 states plus the Virgin Islands have borrowed $36 billion — and will owe millions in interest payments to the federal government. Some states, like New York, have proposed new taxes on companies to make those interest payments.
Staffers for Doggett say the Congressional Budget Office has preliminarily estimated that total interest payments that will be due by states to the federal government in 2012 will be about $1.5 billion.