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Camp Opening Statement: Markup of the JOBS Act

May 11, 2011

The Committee will come to order. We meet today to consider H.R. 1745.

Last Friday, we received the April unemployment numbers.  While there was some good news about the number of jobs being created, the fact is the nation’s unemployment rate ticked back up to nine percent.  In my home state of Michigan, we are perilously close to three straight years of unemployment rates in the double-digits.

During this recession, a record of up to 99 weeks of unemployment benefits have been paid per person.  Of those weeks, 73 have been the full responsibility of the federal government. With a single exception, every one of the nine bills (since June 2008) providing these benefits simply added to our deficits, by a whopping total of $180 billion.

Worse yet, this deficit spending has been poorly targeted – adding insult to already injured taxpayers.  A total of 70 percent of this Federal spending has gone to states regardless of how low their unemployment rate is. For example, in North Dakota the unemployment rate is 3.7 percent, yet the unemployed can collect 60 weeks of benefits – more than a year – including 34 weeks paid 100 percent by the Federal government.

Some argued that these benefits would increase economic activity and employment, but the only increase we have seen is an increase in unemployment taxes.  

While Federal tax rates are starting to rise in some States, including my home State of Michigan, the real concern involves what is going on at the state level.  As a result of the recession, but also Federal policies, State unemployment taxes on jobs have already risen by 44 percent in the past two years, with more tax hikes ahead.  And, employers in 22 states will see their Federal unemployment taxes go up this year.  

Let’s be clear.  We all want to help those who have been affected by the recession move from collecting an unemployment check to earning a paycheck.  But we can’t do that if we are taxing the very men and women we’re counting on to help create the jobs that so many are seeking.   Unemployment taxes are payroll taxes on jobs, plain and simple. And as they grow, these taxes on jobs are only making it harder for the millions of unemployed workers to get back to work.

Clearly, the unemployment program is in need of reform, and that is what the bill before us today starts to do.  The solution we are proposing today in the JOBS Act can be boiled down to these two concepts: reform and forward funding.  The goal is equally simple to understand: help the unemployed by making it more likely they can find a job and get back on their feet.

First and foremost, the JOBS Act makes long overdue reforms to the permanent unemployment benefits program.  These include minimum job search standards, and expecting those most likely to exhaust benefits without finding work (such as people without a high school degree) to get the education or training they need to improve their chances of finding work.  Unemployment benefits are temporary and designed to help people return to work; these reforms strengthen that core purpose.  We also allow States more flexibility to test innovative strategies to help the unemployed return to work, including through wage subsidies and other innovative approaches that have received bipartisan support.

Similar reforms were made in the historic and successful welfare reforms of the 1990s, which expected States to do more to help low-income parents get the education and training they need, search for work, and ultimately take a job.  Unemployed workers deserve no less help today.

The second core feature of the JOBS Act involves forward funding the remaining Federal unemployment funds for this year so that Governors – in conjunction with State legislatures – have the flexibility to best meet the needs of the people in their states.  

Through the end of this year, an estimated $31 billion in temporary Federal unemployment funds will be paid by Washington.  In granting Governors and State Legislatures new authority over these funds – within the confines of their unemployment programs – they will have the ability to:

  1. Pay regular or extended unemployment benefits;
  2. Prevent unemployment tax hikes on employers;
  3. Pay interest or principle on Federal unemployment loans; and
  4. Promote job creation and hiring through the use of reemployment services, including wage subsidies.

I want to be clear about one point, since I am sure we will hear a great deal about it today.  Federal benefits would remain guaranteed, unless the states decided there is a better way to spend this money to help the unemployed.  States can continue paying up to 99-weeks of benefits if that is what they choose to do. In fact, absent State action, that is exactly what will happen.

However, where it makes sense to do something else to help the unemployed with the money, States will have the flexibility make changes that better meet the need of their constituents within the bounds of the unemployment benefits system.

And in some states, that could even include providing additional weeks of benefits beyond what is currently authorized.

Before I close, I would like to make two final comments on the legislation before us – it does not add one dime to the federal deficit. My preliminary discussions with CBO suggest there are some small savings under the bill.  However, per regular order, CBO will provide us with a final score following today’s markup and we will make that available to all members as well as the public.         

Also, staff has identified a technical detail that needs to be fixed to ensure every state can continue operating current unemployment programs.  The issue involves state laws citing certain sections of the federal code.  Mr. Davis, the Chairman of the Human Resources Subcommittee, will have an amendment to address this matter, and it is one I hope will receive unanimous support among the Committee Members.

I now yield to the Ranking Member for any statement he wishes to make, and without objection the opening statement of any Member wishing to submit one will be made part of the record.