The Senate will immediately take up extension of federal jobless benefits when it gets back to work on Monday after its holiday break, and the vote will put Sen. Kay Hagan at the center of a new political fracas.
The North Carolina Democrat, who faces a tough re-election fight this year, has convinced the Senate Democratic leadership to insert a provision into the jobless bill that would restore North Carolina’s eligibility for long-term federal unemployment benefits. The state lost the federal funds last summer when the legislature reduced state benefits.
Hagan says she’s taking action to fix a problem caused by Republicans in the North Carolina legislature. State Republicans counter that she’s stepping in at the last minute to rescue her flagging reelection campaign.
And in the end, Congress might decide to do nothing.
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In Washington, Democrats argue the measure is good for people who need help after many weeks out of work, and good for the economy because it gives them money to spend. Republicans have countered that the $6.5 billion cost for a proposed three-month extension must be covered by spending cuts elsewhere.
The federal program, which kicks in when state benefits expire, ended Dec. 28.
North Carolina lost its federal unemployment benefits last summer when the General Assembly reduced the amount of state benefits and the length of time that unemployed people can receive them. A federal regulation says that states cannot receive Emergency Unemployment Compensation money if they reduce state benefits.
“The General Assembly irresponsibly passed a bill that knowingly and willfully violated federal law and made North Carolina the only state to lose this critical federal assistance, and I’m doing everything possible to remedy the damage this law has done to struggling middle class families who were cut off from this crucial lifeline through no fault of their own," Hagan said.
Thom Tillis, the one of the Republicans who wants to unseat Hagan, is speaker of the state House. In December 2012, he and state Sen. Majority Leader Phil Berger asked Hagan to get unemployment insurance changes put into the fiscal cliff deal so that North Carolina could receive the federal benefits.
Hagan has argued it was impossible to get a waiver then because the state legislature hadn’t finished its own bill at the time. State Republicans counter that she could have tried to get the U.S. Senate to pass legislation to give the state a waiver after the state bill was passed, but she waited until the end of the year instead.
“Only now with her polling numbers tanking and her political career on the line does she suddenly seem interested in getting a waiver,” said state Republican spokesman Daniel Keylin, arguing that Hagan refused to act earlier so that she could blame her rival.
Sen. Richard Burr, R-N.C., said the rule that snared North Carolina, known as the non-reduction clause, should have been changed. He suggested in April, during a confirmation hearing for Labor Secretary Tom Perez, that Congress might make such a change. Perez at the time said the legislature could have changed its law to avoid losing the benefits.
“I am happy to see that Senate Democrats and the Obama administration are finally facing up to the damage caused by the non-reduction clause, included in the various extensions of the stimulus bill, after spending last year with their heads in the sand on the matter,” Burr said by email on Friday. “The long term unemployment crisis in this country is both a human and economic catastrophe and it is extremely unfortunate that some have decided to exploit this issue for political gain.”
He added he would support “fiscally responsible” legislation to extend the benefits. He did not elaborate.
It’s not clear now whether a bill to change the rules or get a waiver for North Carolina would have had a chance of becoming law. The current proposal’s prospects are uncertain as well.
The Senate plans a procedural vote Monday evening to end debate and move on to a vote on the extension. It’s not clear whether there will be the 60 votes needed.
The Republican-controlled House of Representatives is not inclined to extend the benefits unless there’s a deal to pay for it by cutting elsewhere.
Democrats on Friday worked to make their case, ahead of the Senate vote.
When Congress passed the program in 2008, unemployment was 5.6 percent and the average length of time people were without jobs was 17.1 weeks. Today the national rate is 7 percent and the average length of unemployment is 36 weeks, Perez said.
Many people exhaust their state benefits before they find a job, said Betsey Stevenson, a member of the Council of Economic Advisers who spoke in a telephone press briefing with Perez.
Despite a growth in private sector jobs, federal data show there more job seekers than openings, Stevenson said.
Republicans say that the unemployment rate is dropping and that the federal jobless benefits stifle job creation.
President Barack Obama has been urging Congress to extend the benefits. He planned to meet at the White House on Tuesday with people who had lost the benefits.
Hagan and state Democratic lawmakers planned to hold a press conference on the matter in Raleigh on Monday.
According to numbers from Democrats on the House Ways and Means Committee, 49 states lost millions of dollars in benefits in the first week since the federal unemployment plan expired.
In California, for example, 213,793 people lost an average $303 weekly benefit for a weekly total of $64.8 million. In Missouri, 21,329 people lost an average weekly benefit of $235 for a weekly total of $5 million. Nationwide, 1.3 million people lost federal unemployment benefits valued at $408 million per week.
Harvard economist Lawrence Katz said that in North Carolina, unemployment fell from 9.4 percent to 7.4 percent from November 2012 to last November.
“But of that 2 percentage point fall in the unemployment rate, 95 percent of it is from people dropping out of the workforce. And the problem with long-term unemployed dropping out of the workforce is they tend to never come back,” Katz said in a conference call with reporters arranged by House Democrats.