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# Legislative Bulletin.................................................June 11, 2008

**Contents:**

**H.R. 5749---**Emergency Extended Unemployment Compensation Act of 2008

H.R. 5749---Emergency Extended Unemployment Compensation Act of 2008
*(McDermott, D-WA)*

**[Order of Business]{.underline}**: H.R. 5749 is scheduled to be
considered on Wednesday, June 11, 2008, under a motion to suspend the
rules and pass the bill.

**[Summary]{.underline}**: H.R. 5749 creates a temporary program to
extend unemployment benefits beyond the 26 weeks provided under current
law for individuals who have exhausted their regular unemployment
compensation benefit. Below are the *highlights*:

-   **Extension of unemployment benefits in all states:** H.R. 5749
    extends unemployment benefits, for individuals who have exhausted
    their regular benefits, for the lesser of thirteen weeks or half the
    duration of their regular unemployment benefits. The amount of the
    weekly benefit provided by H.R. 5749 would equal the benefit under
    the regular unemployment compensation program. An individual whose
    regular benefit was exhausted on or after May 1, 2007, would qualify
    for the extended benefits.

-   **Additional extension in states with unemployment in excess of
    6.0%:** In addition to the thirteen week extension that is
    applicable to all states, the bill provides an additional extension
    of thirteen weeks for states that have an insured unemployment rate
    of 4 % or higher or a total unemployment rate of 6% or higher.
    According to CBO, one quarter of unemployment compensation
    beneficiaries would receive the additional benefit under this
    provision.

The program would terminate on April 1, 2009, but an individual
receiving benefits under H.R. 5749 would continue to receive benefits
for the entire 13 week period (through June 2009). CBO estimates that
3.2 million people would collect additional unemployment benefits under
this legislation.

**[Background]{.underline}**: The unemployment compensation program
provides up to 26 weeks of benefits. On occasion, with the intent of
addressing periods of higher unemployment, Congress has created a
temporary program to extend benefits beyond the normal period. Congress
has enacted legislation to this effect in 1958, 1961, 1972, 1975, 1982,
1991, and 2002. The most recent program, enacted in March 2002, was
established at a time when the unemployment rate was 5.7% (compared to
today's rate of 5.5%)---lower than the rate at the time of any other
extension of unemployment benefits.

**[Possible Conservative Concerns]{.underline}**: Some conservatives may
have several concerns with this legislation. These potential concerns
include:

-   **Increases deficit by \$12.2 Billion:** H.R. 5749 would increase
    entitlement spending by \$12.8 billion over five years and increase
    the deficit by \$12.2 billion. The legislation includes no offset
    for this new spending. Consequently, the bill violates PAYGO---the
    fifth time the Majority will have violated PAYGO in six months. In
    addition, the real cost of this legislation will likely exceed this
    amount, since Congress may extend the program beyond the April 1,
    2009 sunset date. For example, the last temporary program was
    extended for a total of 30 months.

-   **The unemployment rate is not high by historic standards:** The
    current unemployment rate is 5.5%. Although it has increased in
    recent months, it is still about the same as the average rate during
    the entirety of the Clinton Administration (5.2%). The Congress has
    never created a temporary unemployment compensation program with the
    unemployment rate as low as it currently is. As Ways and Means
    Republicans further note in the committee report, the unemployment
    rate varies significantly between the states and some parts of the
    country have unemployment rates near all time lows. As Committee
    Republicans note in the Dissenting Views:

> "If extended benefits are merited today in States where State
> unemployment rates are exceptionally low, and the National rate is
> lower than it has been in recent decades, when and where do supporters
> of this approach think that extended unemployment benefits should not
> be available?"

-   **Extension of unemployment benefits creates disincentive to find
    work:** Many economists argue that extending unemployment benefits
    creates incentives to delay returning to work, which has a negative
    effect on the economy. As Martin Feldstein states in testimony
    before the Senate Finance Committee in January of this year:

> \"\[w\]hile raising unemployment benefits or extending the duration of
> benefits beyond 26 weeks would help some individuals \... it would
> also create undesirable incentives for individuals to delay returning
> to work. That would lower earnings and total spending.\"

**[Administration Position]{.underline}**: No Statement of
Administration Policy (SAP) is available at press time. However, the
[SAP](http://www.whitehouse.gov/omb/legislative/sap/110-2/saphr2642-s.pdf)
for the Senate-passed supplemental (H.R. 2642), stated:

> "Increasing and extending unemployment insurance benefits when
> unemployment is this low would be unprecedented and counterproductive
> because it would reduce the incentive for workers to find new
> employment."

**[Committee Action]{.underline}**: The bill was introduced on April 9,
2008, and referred to the House Committee on Ways and Means, which held
a mark-up and reported the bill as amended by a vote of 23 to 13, on
April 16, 2008.

**[Cost to Taxpayer:]{.underline}** According to CBO, the bill increases
entitlement spending by \$12.8 billion over five years and \$11.7
billion over ten years. CBO estimates that revenues would increase by
\$600 million over five years and \$3.2 billion over ten years.
Consequently, the bill would increase the deficit by \$12.2 billion over
five years and \$8.5 billion over ten years.

However, as Ways and Means Republicans point out in the committee
report, these figures likely understate the true cost of H.R. 5749. The
reason is that while the temporary unemployment compensation extension
program expires at the end of April 2009 under H.R. 5749, historically
these programs are extended beyond the first expiration date. For
example, the last such program created in March 2002, was extended for a
total of 30 months.

**[Does the Bill Expand the Size and Scope of the Federal
Government?]{.underline}**: Yes, it expands entitlement spending by
\$12.8 billion over five years.

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: No.

**[Does the Bill Comply with House Rules Regarding Earmarks/Limited Tax
Benefits/Limited Tariff Benefits?]{.underline}** House Report 110-607
states, "Pursuant to clause 9 of rule XXI of the Rules of the House of
Representatives, the Ways and Means Committee has determined that the
bill as reported contains no congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of that Rule."

**[Constitutional Authority]{.underline}**: The committee report cites
constitutional authority in Article 1, Section 8 of the Constitution,
but fails to cite a specific clause. However, House Rule XIII, Section
3(d)(1), requires that all committee reports contain "a statement citing
the *specific* powers granted to Congress in the Constitution to enact
the law proposed by the bill or joint resolution" *\[emphasis added\]*.

[RSC Staff Contact]{.underline}: Brad Watson,
[**brad.watson@mail.house.gov**](mailto:joelle.cannon@mail.house.gov),
202.226.9719.