02.13.11
“This proposal will return the critical but overextended unemployment insurance program to solvency over several years, without raising the taxes on employers. It will allow states to continue providing a safety net to workers who have lost their jobs through no fault of their own, while maximizing the chances that federal taxpayers will be repaid for all of the temporary assistance the federal government provided to states for unemployment insurance during the recession,” Durbin said.
“As we plan for the next fiscal year, we must focus on targeted investments to help America build critical infrastructure, educate the workers of today and tomorrow, and innovate to create the jobs of the 21st century. This will help our economy grow more quickly, so the unemployed can get back to work as soon as possible. We also have a $14 trillion debt that we have to responsibly address, and we can do that by investing smartly in important programs that work, such as unemployment insurance.”
Although joblessness rates have fallen, there are still currently more than 620,000 unemployed people in Illinois. At a time when such a huge number of people are temporarily relying on unemployment insurance, the trust funds from which those payments are made can become depleted. Under current law, states are required to immediately pay interest on any money they need to borrow from the federal government to make payments to the jobless if their trust funds run dry. States must then raise unemployment taxes on local employers to quickly make up for any shortfalls.
Durbin’s proposal would waive the interest payments that Illinois and other states would otherwise be required to pay for the next two years, and it would also waive the requirement that Illinois immediately charge companies higher taxes. This will allow states to focus on making the payments it owes to its vendors and creditors, and employers to focus on hiring new workers.
Beginning in 2014, once the economy has better recovered, Illinois and other states will have greater flexibility in figuring out how to replenish its trust fund and prepare for the next downturn. The governor’s office estimates that this proposal will save the state more than $200 million over the next two years and save Illinois employers more than $300 million.
“This is the kind of common sense, fiscally responsible proposal that America must have more of, and that will create more jobs with less debt. I welcome the President’s proposal, and will fight to see it become law,” Durbin said.
Leading economists, including the nonpartisan Congressional Budget Office, rank providing unemployment insurance as one of the most stimulative things the federal government can do during an economic downturn, because nearly every dollar provided is immediately plowed back into the economy. That spending helps drive up demand for what private companies sell, which encourages companies to hire more workers to meet that demand.
Durbin Announces New Legislation to Ensure Long-Term Viability of Unemployment Insurance Program
[SPRINGFIELD, IL] – To ensure that Illinois and other cash-strapped states are able to continue providing a critical lifeline to struggling families as they search for work, U.S. Senator Dick Durbin (D-IL) announced today that he will introduce legislation in the Senate this week to revamp the unemployment insurance program and ensure its long-term solvency. The Unemployment Insurance Solvency Act will solidify the program’s finances while giving states greater flexibility in managing their costs without raising the taxes employers pay to Washington. A similar proposal is expected to be included in the budget that President Obama will submit to Congress tomorrow.“This proposal will return the critical but overextended unemployment insurance program to solvency over several years, without raising the taxes on employers. It will allow states to continue providing a safety net to workers who have lost their jobs through no fault of their own, while maximizing the chances that federal taxpayers will be repaid for all of the temporary assistance the federal government provided to states for unemployment insurance during the recession,” Durbin said.
“As we plan for the next fiscal year, we must focus on targeted investments to help America build critical infrastructure, educate the workers of today and tomorrow, and innovate to create the jobs of the 21st century. This will help our economy grow more quickly, so the unemployed can get back to work as soon as possible. We also have a $14 trillion debt that we have to responsibly address, and we can do that by investing smartly in important programs that work, such as unemployment insurance.”
Although joblessness rates have fallen, there are still currently more than 620,000 unemployed people in Illinois. At a time when such a huge number of people are temporarily relying on unemployment insurance, the trust funds from which those payments are made can become depleted. Under current law, states are required to immediately pay interest on any money they need to borrow from the federal government to make payments to the jobless if their trust funds run dry. States must then raise unemployment taxes on local employers to quickly make up for any shortfalls.
Durbin’s proposal would waive the interest payments that Illinois and other states would otherwise be required to pay for the next two years, and it would also waive the requirement that Illinois immediately charge companies higher taxes. This will allow states to focus on making the payments it owes to its vendors and creditors, and employers to focus on hiring new workers.
Beginning in 2014, once the economy has better recovered, Illinois and other states will have greater flexibility in figuring out how to replenish its trust fund and prepare for the next downturn. The governor’s office estimates that this proposal will save the state more than $200 million over the next two years and save Illinois employers more than $300 million.
“This is the kind of common sense, fiscally responsible proposal that America must have more of, and that will create more jobs with less debt. I welcome the President’s proposal, and will fight to see it become law,” Durbin said.
Leading economists, including the nonpartisan Congressional Budget Office, rank providing unemployment insurance as one of the most stimulative things the federal government can do during an economic downturn, because nearly every dollar provided is immediately plowed back into the economy. That spending helps drive up demand for what private companies sell, which encourages companies to hire more workers to meet that demand.
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