Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

U.S. Congress begins new year as showdown on jobless benefits looms

January 7, 2014

By Thomas Ferraro and Steve Orlofsky

WASHINGTON (Reuters) – The U.S. Congress on Monday began what promises to be another combative year by bracing for a showdown over a White House-backed bill to renew unemployment benefits for 1.3 million Americans.

A vote was expected at about 6:30 p.m. EST (23:30 GMT) on whether to begin debating the measure. It has the support of President Barack Obama’s fellow Democrats, who say the action is needed to help the unemployed and their families, and protect the U.S. economy.

But most Republicans oppose the extension unless its estimated $6 billion cost is offset by cuts elsewhere to prevent an increase in the federal debt.

Republicans also say that the U.S. economy, with the jobless rate now at a five-year low of 7 percent, is on the mend and that such emergency federal assistance is no longer necessary.

The best way to spread the wealth, Republicans argue, is to create more of it by easing federal regulations and taxes.

Regardless how the Senate vote turns out, it will kick off a 2014 drive by Obama and his Democrats to stem a growing gap between rich and poor.

The Democrat-led Senate plans to escalate the fight in coming weeks by bringing up for a vote a bill to increase the federal minimum wage, which has stood at $7.25 an hour since July 2009. Democrats want it to rise over three years to $10.10, and then be indexed to inflation in the future.

Just hours before the Senate vote on the bill to extend jobless benefits, Democratic Senator Jack Reed of Rhode Island, one of the measure’s chief sponsors, said it was unclear if backers would get the needed 60 votes in the 100-member Senate to clear a Republican procedural hurdle.

The Democrats, who hold a 55 to 45 majority in the Senate, are expected to vote unanimously to advance the bill. But just one Republican seems certain to do so, Dean Heller of Nevada, a co-sponsor of the measure.

The Reed-Heller bill would extend for three months the Emergency Unemployment Compensation program, which ended on December 28 when its funding expired.

Signed into law in 2008 by Republican President George W. Bush, the program last year provided the jobless an average of $300 per week for an additional 28 weeks once state benefits ended.

About 1.3 million Americans lost their benefits on December 28. Unless the program is renewed, another 2 million are expected to lose their benefits in the first six months of this year.

Supporters argue that besides helping the unemployed, the program boosts the economy as recipients quickly spend their benefit checks on essential goods, helping local retailers.

Reed said if backers of his bill fail on Monday to muster the 60 votes needed to advance the bill, they would keep pushing to build support in coming days.

“Public pressure will build,” Reed said. “People need help.”

Obama intends to help whip up such public support with an event at the White House on Tuesday with long-term unemployed.

As he nears the sixth year of his presidency, Obama has said he wants to step up efforts to help the needy by extending jobless benefits, raising the minimum wage, increasing funding for education and revamping immigration laws.

But his appeals drew fire from Republicans, who see them as attempts to increase taxes, particularly on the rich, to cover the costs of his initiatives.

Republican Senator Rand Paul of Kentucky told ABC’s “This Week” on Sunday that he was not opposed to renewing jobless benefits. But he added, “I’m opposed to having it without paying for it.”

Paul, like House Speaker John Boehner, the top U.S. Republican, said that any extension should be coupled with new moves to create jobs.

The new year raises a new question: Will Congress be more productive and popular in 2014 than in 2013 when it did not do much of anything and had an approval rating below 10 percent.

Despite a bipartisan budget deal at the end of last year, Congress is likely to remain a tough place to find common ground.

That is largely because lawmakers will be busy jockeying for position in advance of the November elections, when a third of the 100-member Senate and the entire 435-member House will be up for grabs.

(Reporting by Thomas Ferraro; Editing by Steve Orlofsky)