AFTER four months of bitter politics and two presidential rebuffs, congressional Democrats and the White House have agreed on a law that extends unemployment benefits to the nation's long-term jobless.That was the easy part. For all the difficulty lawmakers had financing the new unemployment package, few doubt they will have even more difficulty creating a plan to quicken America's start-again, stop-again economy. "The long-term growth picture doesn't look good," says Rep. Lee Hamilton (D) of Indiana, vice chairman of the Joint Economic Committee. "We can't make up our minds whether we're out of the recession." The Senate concluded 24 hours of stormy debate late Friday night by passing two bills; it accepted 91 to 2 a $5.3 billion House bill providing 6, 12, or 20 weeks of extended benefits to people who have been out of work since at least March 1; senators then approved and sent to the House a second bill worth about $400 million that would shift states receiving six weeks of benefits to the 13-week level.
President signs bill President Bush immediately signed the House bill into law. Twice previously, in August and October, Mr. Bush blocked or vetoed bills similar to the one he signed that would have extended unemployment benefits by declaring a budget emergency. The new benefits will run through July 4 under the House bill, mid-June under the second Senate bill. The complicated formula for determining whether a state gets 6, 12, or 20 weeks of extended benefits, which was the focus of contention in the Senate, takes into account a state's adjusted insured unemployment rate (the percentage of people receiving unemployment, adjusted to include those who have exhausted their regular benefits), the exhaustion rate (the percentage of workers who have exhausted their regular benefits compared to those filing claims), and the total unemployment rate.
Longer benefits for some "States that have been more generous and have higher unemployment get longer benefits," says Wayne Vroman, an unemployment expert at the Urban Institute here. The White House objected to the previous versions of the legislation because extended benefits would have been paid for by adding to the federal deficit, which Bush claimed would have violated last year's budget agreement. But under that agreement, the president can declare an emergency if Congress consents. The House bill pays for itself with various revenue adjustments. About $2.6 billion will be generated by having taxpayers who file quarterly and who expect to increase their income by $40,000 over last year calculate their payments based on what they will earn this year instead of what they earned last year. The law also extends the current rate of the employers' unemployment tax for one year, raising about $878 million. Another $2.8 billion will be raised over six years by holding tax refunds to those w ho default on student loans. The most heated debate in the Senate focused on so-called "reachback benefits." The House bill extends 13 or 20 weeks of benefits to workers who exhausted their benefits after March 1 and who live in a state with an insured unemployment rate of at least 3 percent. Eighteen states qualified for reachback under the House bill. But after strong objections from senators whose states did not qualify for reachback, the Senate agreed on a second bill that extends benefits to 13 weeks for all states. The House must vote on that bill this week. Roughly 300,000 unemployed workers exhaust their benefits every month, according to William Spriggs, a labor economist at the Economic Policy Institute. To the record 3 million people who will have exhausted regular benefits by the end of 1991, the extensions are welcome, but they come against a foreboding backdrop.
Drop in sales reported The government last week reported retail sales dropped in October. Real average weekly earnings fell seven-tenths of 1 percent last month; and the number of people appyling for unemployment rose by 33,000 in the first week of November to the highest weekly level since May. Further evidence of a lack of consumer confidence came Friday, when the Dow Jones industrial average dropped 120 points over concern about possible credit card interest-rate caps. "The recession is probably over, but the recovery has not yet begun," says Glenn Forman, an economist with the Conference Board in New York. "The government is at a loss for what to do," he adds, noting that cuts in interest rates have not had an effect on spending and lending. Mr. Spriggs echoes this pessimism. Referring to tax-cut proposals floating around the capital, he says that "tax legislation won't stimulate the economy. Bush's problem is that his advisers don't think jobs programs have impact. There are no other proposals from the Democrats to stimulate the economy." Both economists agree that the quickest way to jump-start the economy is also the best solution for the unemployed: investment in public works projects.