National Defense Authorization Act for Fiscal Year 2012
Floor Speech
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PAYROLL TAX CUT AND UNEMPLOYMENT COMPENSATION
Mr. REED. Madam President, I rise today to urge my colleagues to extend and expand the payroll tax cut and to fully extend unemployment compensation insurance immediately. The payroll tax cut and full extension of unemployment insurance are two of our best tools for strengthening our economic recovery. We must work without let-up to pass this legislation before year's end.
Democrats are doing everything we can to create jobs and solve our unemployment crisis. Millions of Americans are still out of work, however, and looking for a job in the toughest economy since the Great Depression. Jobless benefits, which have been essential to millions of Americans as they search for a job, are set to expire at the end of this year.
Congress has never failed to extend benefits when unemployment is this high. Unfortunately, right now, Republicans are refusing to fully extend unemployment insurance, despite our Nation's 9 percent unemployment rate. In extending benefits, we should not do any less for the recently unemployed than we did for those who were unemployed in the last year or two. That is why I introduced the Emergency Unemployment Compensation Extension Act of 2011, which fully extends Federal support for unemployment insurance through 2012.
Extending benefits doesn't just make sense for a person who has been laid off, it makes sense for the economy as a whole. In fact, during today's hearing in the Senate Banking Committee, a business operator recognized that failing to extend unemployment insurance would have a negative impact on their business. Its was hard for him to quantify, but the sense he has, from operating a very dispersed convenience store operation throughout this country, is there would likely be a negative impact.
Those impacts will be magnified and multiplied throughout our economy. It will, ironically, cause not just those without jobs to lose benefits, it will also probably lead to further reductions in jobs as demand falls off and the need for employees, particularly in retail establishments, might lessen.
That is why, if Congress truly wishes to help strengthen our economy, we need to extend unemployment insurance now. The reason we must fully extend unemployment insurance is simple: If people don't have jobs, they can't spend money. If people can't spend money, businesses go under. If businesses fail, more people lose their jobs, and the downward spiral continues.
Extending unemployment insurance is not just the right thing to do, it is a wise investment with a strong rate of return that will provide a much needed economic boost to every State across the country.
Unemployment is, regrettably, a national crisis. This program will address a nationwide problem, and it will do it in an extraordinarily cost-effective way. The CBO has calculated that this has one of best returns on the dollar. The reason we must fully extend unemployment insurance is quite simple. People who are receiving unemployment benefits need that money to pay for groceries, to put some gas in the car, to take care of those immediate expenses. So, as the economists would say, their marginal propensity to consume--i.e., their willingness to take the dollar in and spend it out--is very high. As a result, this program not only helps families who are struggling, it also immediately injects dollars and demand into the economy. These programs have a real benefit.
We understand what we have to do to address our unemployment crisis and that is to grow the economy, and that means we must create jobs. Again, this program will help stimulate demand, will help keep people at work and perhaps even--we hope--put more people to work.
When it comes to the efficacy of this program, the bang for the buck, it is among the most effective. I referred earlier to some economists--in specific terms--Alan Blinder and Mark Zandi have estimated that for every dollar spent on extending unemployment benefits, the economy grows by $1.61. The Economic Policy Institute has estimated that failing to extend UI benefits for a year could result in the loss of $72 billion in economic activity for 2012, which impacts 560,000 jobs across the country. The country cannot afford this hit. We cannot afford to miss the opportunity to maintain or create over 500,000 jobs. We cannot ignore the fact that, in this very critical budget situation, this is one of the most cost-effective ways to continue to stimulate demand and grow jobs in our country.
We also have to understand that we are dealing with a situation that is getting to be critical because we are running out of time. These benefits will expire at the end of the year, and we must move forward.
I think we can also do something else, and that is to improve this program. One way to improve it is to adopt a program that is very effective in my State of Rhode Island and several other States across the country, and that is work sharing. Work sharing is a voluntary program that prevents layoffs, it keeps people on the job, it helps employers retain skilled workers, and it strengthens the unemployment insurance system.
Over 20 States are utilizing this program. They estimate they saved 100,000 jobs in 2010 alone. Essentially what it does is it allows an employer--for example--to keep people on the job for 3 out of 5 days of the week, and the other 2 days are compensated for by the Unemployment Insurance Fund. The fund saves money, and the employer keeps these people in the workplace with all their skills and all their contributions to the firm. It is a win-win, and it is something over 20 States across this country have embraced. I think it should be national, and we have provisions in legislation I've introduced that would help extend it nationally.
Again, we cannot delay. I urge all of my colleagues to join me in taking the needed steps to help our economic recovery and extend our unemployment compensation insurance program before the end of this year.
Madam President, I yield the floor.
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