By Walter Alarkon - 09/21/09 11:27 PM EDT
If the bill passes this week, more than 300,000 Americans who are getting unemployment checks boosted by the stimulus will continue to receive them after September, which is when they were scheduled to end. The legislation, sponsored by Rep. Jim McDermott (D-Wash.), would extend by 13 weeks benefits that have gone to the unemployed in those states whose jobless rates are higher than 8.5 percent.
The benefits “will continue to help hundreds of thousands of Americans who lost their jobs through no fault of their own in this so-called Great Recession,” he said in a release.
Democrats in both the House and Senate have voiced support for the extension. GOP senators won’t oppose the extension as long as it’s paid for, according to a Republican Senate aide.
McDermott’s bill would offset the $1.4 billion cost of the extension largely by continuing a federal unemployment tax that former President George W. Bush had extended when he signed legislation bailing out financial firms last October. The bill would find revenue by clamping down on the overpayment of unemployment benefits.
Though White House economists predicted that the jobless rate would peak at around 8 percent, the rate in August was 9.7 percent, the highest in 26 years. The latest White House economic report projects that it will remain near 10 percent into next year and won’t return to the pre-recession levels of less than 6 percent until 2014.
A proposed extension of another stimulus provision — the $8,000 tax credit to first-time homebuyers — is also gaining momentum. The tax credit, set to expire at the end of November, has helped boost the housing market, according to senators from both parties. A bill, sponsored by Sen. Ben Cardin (D-Md.) and backed by Senate Majority Leader Harry Reid (D-Nev.) and GOP Sens. John Ensign (Nev.) and Johnny Isakson (Ga.), would extend the tax credit by six months.
Lawmakers and the National Association of Realtors, which has been lobbying to extend the tax break, have said it has helped sustain increases in home sales for seven straight months.
“As we are fighting to get our economy back on track, we cannot afford to let lapse an important tool that has had a positive effect on the housing market,” Cardin said.
Isakson has called for increasing the maximum amount of the credit to $15,000 and making it available to couples with incomes more than $150,000. But he decided to back the proposed extension of the current credit “because he feels it may be the legislation that ends up on the Senate floor,” according to Isakson’s spokeswoman, Sheridan Watson.
Several Democrats and Republicans have also backed a plan to extend a tax provision in the stimulus that helps small businesses to write off losses during the recession. Senate Finance Committee Chairman Max Baucus (D-Mont.), Sen. Olympia Snowe (R-Maine) and Rep. Patrick Tiberi (R-Ohio) called for a continuation of the “carryback” provision, which expires this year and amounted to $15 billion in the stimulus.