Unemployment benefits waiting on Congress to reach a tax-cut deal

Congress crept closer over the weekend to consideration of an extension of federal unemployment benefits as the Senate launched its first tax-cut votes of the lame-duck session.

The faster lawmakers can dispense with several largely symbolic votes and reach a compromise on the Bush-era tax cuts, which expire at the end of the year, the quicker a probable yearlong extension of unemployment benefits will pass.

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As expected, an extension will be included in a larger tax-extenders measure, currently under negotiation, which would include the 2001 and 2003 expiring tax cut provisions as well as other lingering agenda items.

Senate Finance Chairman Max Baucus (D-Mont.) also has introduced a wide-ranging tax extenders bill that includes a one-year extension of the jobless benefits and extends tax cuts for households making $250,000 a year or less. That failed Saturday by a vote of 53-36, with all GOP senators in opposition as well as Democrats Russ Feingold (Wis.), Joe Manchin (W.V.), Ben Nelson (Neb.) and Jim Webb (Va.) and Independent Joe Lieberman (Conn.).

The questions now are when an accord will be reached and what it will include.

House and Senate leaders want to leave town by Dec. 18 and it could take the better part of the next two weeks for both chambers to conclude their negotiations and pass comprehensive legislation with the holidays looming.

Unemployed workers whose federal jobless benefits began lapsing Wednesday will probably have to wait until then for a restart while congressional lawmakers iron out a deal.

At this point, negotiators have put together the outlines of a deal that would extend all of the Bush tax cuts for two years and extend federal unemployment benefits for a year.

Democrats also are pushing for an extension of the Making Work Pay and college-tuition tax credits that were part of the 2009 economic stimulus package.

Republicans have balked at the cost of the Making Work Pay, which affects middle-income taxpayers, and the college-tuition tax credits, which would cost an estimated $62 billion and $8 billion, respectively, to extend for one year, according to GOP sources.

The White House and lawmakers have made clear that nothing is final yet.

The Senate voted Saturday morning on extending the tax cuts. In addition to the Baucus plan, senators also shot down a proposal by Sen. Charles Schumer (D-N.Y.) that would extend the cuts for those with income of $1 million or less. That failed, 53-37, with Sen. Tom Harkin (D-Iowa), Dick Durbin (D-Ill.) and Jay Rockefeller (D-W.Va.)  joining the ‘no’ votes.

Neither measure was expected to pass, but the votes showed Democrats trying to paint Republicans as supporters of the nation's wealthiest as the likelihood of an extension of all the Bush tax cuts grows.

The move in the Senate to load up one bill with pending agenda items, including unemployment insurance, is at odds with what the House Democratic leadership wants.

On Wednesday, House Majority Leader Steny Hoyer (D-Md.) panned a possible deal that would link the stalled extension of unemployment benefits to a compromise on expiring tax cuts.

“I think that making a political deal on unemployment insurance is not what America ought to be about,” Hoyer said.

While that approach could work fine in the House, the chances are nearly impossible of a stand-alone bill getting through the Senate, especially since Senate Republicans have vowed to hold up all other legislation until the tax cuts are done.

During the past couple of weeks, the House and Senate failed to pass a stand-alone extension of the benefits before they expired Nov. 30, leaving upward of 2 million recipients who stand to lose their benefits by the end of the month.

The benefits are expected to run out for 800,000 unemployed workers by the end of next week for those who have exhausted their 26 weeks of state benefits.

The urgency to extend federal jobless benefits intensified Friday after a disappointing jobs report showed a smaller-than-expected gain of 39,000 jobs in November with the unemployment rate jumping to 9.8 percent.

National unemployment figures for November moved the rate up to 9.8 percent as the economy added only 39,000 jobs for the month. Economists had expected as many as 150,000 jobs would be added.

"We need to continue to extend unemployment insurance benefits especially for those other 2 million people that will lose their benefits," Labor Department Secretary Hilda Solis said Friday. "That will increase the unemployment rate if we do nothing, and I can assure you it will affect businesses. You'll see a higher rate of unemployment."

Vice President Joe Biden said an extension is the "right thing to do" and that it will help spur economic growth.

"It must be done before they leave town," Biden said.