By F. Scott McCown

Congress is now considering two important issues: whether to extend the Bush tax cuts and whether to extend the federally funded Unemployment Insurance program. To extend any part of the Bush tax cuts, particularly the high-end cuts, while cutting off Unemployment Insurance would betray hardworking Texans.

When a breadwinner loses a job through no fault of their own, they and their family are protected by Unemployment Insurance -- a federal-state program paid for by employers. The regular state program provides 26 weeks of benefits. Responding to the recession, Congress provided federal funding for an additional 67 weeks. But federal funding is running out, and if Congress fails to act by November 30, nearly 128,000 unemployed Texans will not get all or part of the additional weeks.

Both the public and history support extending Unemployment Insurance. A recent national survey shows 67 percent of the public are in favor of continuing Unemployment Insurance until the unemployment rate drops. And Congress has never allowed federally funded extensions to lapse when unemployment was over 7.2 percent. With the national unemployment rate well above 9 percent for 18 consecutive months, it’s far too soon for Congress to cut off Unemployment Insurance.

With the unemployment rate in Texas above eight percent for 14 consecutive months, Texas needs help as much as any state. Texas has almost 125,000 fewer available jobs than when the recession began in December 2007.

On top of everything else, if Congress cuts off federal Unemployment Insurance before it creates a sufficient number of jobs, Texas will face increased enrollment in our public assistance programs such as the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and Medicaid. Texas will be hard-pressed to cover its share of these increased costs because of our state revenue crisis.

Even though the case for Congress extending Unemployment Insurance is clear, two sticking points have emerged. Some argue that the unemployed need tough love to force them back to work by cutting off this “government handout.” But it’s way too soon for tough love.

The country has one job for every five people seeking work. And not every job seeker fits every job. Employers can be picky -- free to reject both the under- and over-qualified worker. Unemployment Insurance keeps the unemployed in the hunt, giving the economy time to create new jobs and workers time to get new skills.

Unemployment Insurance plays an important role in helping the economy maintain and create jobs. Unemployment Insurance allows Texas families to continue to pay their bills. For every dollar spent on benefits, approximately $2 is generated in spending. This spending supports Texas businesses, averting additional job losses and creating more jobs. Federal unemployment insurance programs have injected $5.8 billion into the Texas economy and have added an estimated $11.6 billion to our state’s Gross Domestic Product.

Nevertheless, some argue that Congress should not continue providing the additional weeks of Unemployment Insurance without spending cuts in some other part of the budget. But extending Unemployment Insurance would have virtually no effect on our long-term national debt because it’s temporary, and requiring off-setting spending cuts would actually be counterproductive because it would take money out of the economy.

Unemployment Insurance is far more important to our economic recovery than extending the high-end Bush tax cuts. The nonpartisan Congressional Budget Office estimates that federal Unemployment Insurance rates the highest in boosting the economy and creating jobs, while extending the high-end tax cuts rates the lowest.

Congress should provide an extension for a full year. Anything less is too little. And Congress should act now -- before the November 30 expiration of current benefits. Providing retroactive benefits in December is too late. Children can’t be fed retroactively. Congress needs to act to protect hardworking American families.
McCown is executive director of the Center for Public Policy Priorities.
Copyright (C) 2010 by the Texas Lone Star Forum. 11/10