FOR decades, the unemployment insurance system successfully provided a vital safety net for jobless Americans. But in the 1980s, unemployment insurance (UI) became a sacrificial lamb at the altar of the Reagan budget cuts. The extended benefits program was gutted, benefits for veterans were reduced, and eligibility for benefits was dramatically restricted. The result is a safety net filled with holes.With the economy in recession and the unemployment rate now at 7 percent, the weakness of UI as our first line of defense is starkly apparent. Only about two of five jobless workers receive benefits, long lines have formed at unemployment offices because states do not have enough money to pay administrative expenses, and few states have activated extended benefits programs despite the high jobless rate. What about the human cost of a system that is not working as it was intended? At a recent hearing I chaired, we heard testimony from several unemployed individuals struggling to survive. Typical of the plight they face today was the story of a chambermaid in Philadelphia. At age 52, she found herself unemployed for the first time in her life when a new owner purchased the hotel where she worked and hired replacement workers. Her attempts to find another job were thwarted by long lines at the local employ ment office caused by staff cutbacks. The weekly unemployment compensation check was her only safety net, but was about to run out because the extended benefits program had not been activated in her state. What can we do about holes in the unemployment safety net on which several million Americans rely? First, we need to replace the federal-state extended benefits program which was created to provide additional benefits when the jobless rate is high. Under current law, the trigger for extended benefits is the insured unemployment rate. This reflects the number of individuals collecting regular unemployment benefits, not the actual number of jobless workers in a state. Because the percentage of unemployed workers covered by regular unemployment benefits has dramatically declined, the extended benefits pr ogram has virtually ceased to function. Extended benefits should become a federal program and the trigger should be a state's total unemployment rate, a more realistic picture of the jobless situation. In addition, three tiers of benefits, instead of the present all or nothing trigger, will gradually provide a maximum of 20 weeks of additional unemployment compensation when finding a job is more difficult. Second, we should restore military veterans' benefits to the same 26 weeks available to civilians. Treating returning Persian Gulf personnel and other veterans as second-class citizens is without justification, and unconscionable. Third, we need to limit states' ability to deny unemployment benefits. The percentage of jobless workers collecting UI benefits has dropped by roughly 20 percent compared to pre-1980 levels. This can be reversed by limiting the circumstances under which eligible claimants are disqualified. Finally, we need to provide additional assistance to workers who have lost their jobs as a result of federal actions to protect endangered species or to close or realign military bases. A recent report by the Center on Budget and Policy Priorities concluded that the unemployment insurance system entered the present economic downturn in worse shape than at any time since the end of World War II. Even if the recession ends soon, economists anticipate that unemployment, and particularly long-term unemployment, will continue to grow. Many Americans who lose their jobs today are free-falling toward financial disaster because the effectiveness of the unemployment insurance system was seriously diminished during the last decade. It's time we fixed the holes in the system so that we have an adequate safety net when working Americans really need it.