Extension of jobless aid debated As benefits run out, jobless workers ask Congress for help.

July 25, 1991|By John Fairhall | John Fairhall,Evening Sun Staff

WASHINGTON -- With hundreds of thousands of workers running out of unemployment compensation benefits, the Senate Finance Committee today is expected to approve legislation extending benefits beyond the current 26-week limit, the committee chairman said.

But the proposal faces an uphill fight in Congress, as well as opposition from the Bush administration.

More than 18,000 unemployed workers in Maryland have exhausted their benefits, state officials say. Under the committee bill, they could receive from four to seven additional weeks of compensation.

Workers in states with high unemployment rates would be eligible for up to 20 additional weeks.

The committee vote comes a day after hundreds of workers from Maryland and other states rallied outside the U.S. Labor Department.

"My benefits will run out in two weeks," said Sandy Jones, 41, who was carrying a sign reading, "26 Weeks Is Not Enough."

Jones, a single mother from Essex, said she was a $21,000-a-year secretary for an architectural engineering firm in Baltimore until February, when declining business cost her and other workers their jobs. Since then, she has been unable to find work that pays enough to support her and her child.

Like other workers at the union-organized rally, she cast doubt on the Bush Administration's contention that the recession is ending.

"If you get your foot in the door for an interview, you're either under qualified or overqualified," she said, adding that some employers are taking advantage of the situation by offering lower wages.

She said the next stop for her may be the welfare office. "I don't wish to do that," she said.

The cries of people like Jones are being heard in Congress. Last week, the chairman of the Senate Finance Committee, Sen. Lloyd M. Bentsen, D-Texas, raised workers' hopes by proposing an emergency extension of as long as 20 weeks.

The length of the extension would depend on a state's unemployment rate. Unemployment nationally reached 7 percent in June, the highest total in five years. States with unemployment rates of 7 percent could provide 13 weeks of additional benefits; an 8 percent rate would trigger up to 20 additional weeks.

In Maryland, where 148,000 people were jobless as of May and the rate was 5.8 percent, workers could receive up to four additional weeks of benefits. They could receive seven weeks if Maryland's unemployment rate reaches 6 percent.

Although Bentsen predicts the committee will pass the bill, it faces an uncertain future, with the possibility that Senate opponents may try to hold up the legislation.

House legislation extending benefits has been stalled for some time in the Ways and Means Committee. Many members are reluctant to raise taxes on employers, who fund the unemployment benefits system. Lawmakers also don't want to break last year's budget agreement with the administration, which limited new spending unless matched by cuts.

Assuming the legislation cleared Congress, the next hurdle is the Bush Administration, which argues that there's no need for an extension because the recession is ending. Michael Boskin, chairman of Bush's Council of Economic Advisers, said Tuesday that the administration would "look much more favorably" on extending benefits if they were offset by spending cuts elsewhere.

The issue has strong political overtones because many Democrats see it as an opportunity to score points at Bush's expense while burnishing their party's image as a voice of the working person.

Nonetheless, Democrats themselves are split over how to fund an extension. The different concerns are reflected in the views of Sen. Paul S. Sarbanes, D-Md., and Maryland Rep. Benjamin L. Cardin, D-3rd, a member of the House Ways and Means Committee.

Sarbanes and Bentsen are the most outspoken Senate supporters of an extension. Both spoke at the rally, firing up the crowd by saying that if President Bush can support emergency aid to the Kurds in Iraq and to storm-ravaged Bangladesh, then he can find money for American workers.

Sarbanes noted in an interview that the federal unemployment trust fund designated to pay extended benefits has more than $8 billion. It's not being tapped much now because only a handful of states qualify for extended benefits under present rules.

Bentsen's bill, which Sarbanes supports, essentially would suspend the existing rules and use $5.4 billion from the fund in 1992.

"That fund is building up a surplus right in the middle of a recession," Sarbanes said.

Proposals for paying for extended benefits come back to the same source -- employers.

In Maryland, employers pay a tax ranging from .1 percent to 6.5 percent of each worker's pay, up to $7,000. Employers with a history of laying off larger numbers of workers pay the most.

Each state sets its own tax rate and maintains a trust fund for paying regular unemployment benefits. The Maryland Department of Economic and Employment Development recently ordered employers to pay a 1.7 percent surcharge, which was triggered when higher unemployment drained the state fund to a level below $550 million.

Employers also pay a federal payroll tax of .8 percent, which goes directly into the fund that pays extended benefits. It is this fund that now totals more than $8 billion and would be tapped by Bentsen's bill.

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