Unemployment Insurance: Legislative Issues in the 112th Congress

Julie M. Whittaker
Specialist in Income Security

Katelin P. Isaacs
Analyst in Income Security

The 112th Congress may consider a number of issues related to currently available unemployment insurance programs: Unemployment Compensation (UC), temporary Emergency Unemployment Compensation (EUC08), and Extended Benefits (EB). With the national unemployment rate predicted to remain high into next year, the increased demand for regular and extended unemployment benefits will continue. At the same time, the authorization for several key unemployment insurance provisions is temporary and will expire. For instance, the EUC08 program, which currently provides the bulk of extended unemployment benefits, is scheduled to expire the week ending on or before January 2, 2013. The 100% federal financing of the EB program will expire December 31, 2012. The option for states to use three-year EB trigger lookbacks expires the week ending on or before December 31, 2012. In addition, a temporary 0.2% federal unemployment tax (FUTA) surtax expired at the end of June 2011.

The 112th Congress faces these expirations as well as other likely unemployment insurance policy issues, including unemployment insurance financing. In addition, recent policy discussions have focused on the appropriate length and availability conditions of unemployment benefits.

This report provides a brief overview of the three unemployment insurance programs—UC, EUC08, and EB—that may currently pay benefits to eligible unemployed workers. This report also discusses relevant legislation introduced in the 112th Congress: specifically, H.R. 1745, S. 386, H.R. 650, H.R. 589, H.R. 1663, H.R. 235, S. 310, H.R. 569, H.R. 2001, H.R. 2120, H.R. 2137, H.R. 2731, H.R. 2806, H.R. 2868, S. 1743, H.R. 3346, S. 1804, S. 1826, H.R. 3427, S. 1885, S. 1931, S. 1944, H.R. 3598, H.R. 3601, H.R. 3630, H.R. 3615, H.R. 3638, H.R. 3743, H.R. 494, S. 2095, S. 2081, a proposal outlined in the President’s Budget Proposal for FY2013, as well as the President’s American Jobs Act of 2011 proposal (introduced in Congress as S. 1549, H.R. 12, and S. 1660). This report also discusses the implications for the UI programs with respect to provisions in H.R. 2693, S.Amdt. 581 to S. 1323, P.L. 112-25, P.L. 112-40, P.L. 112-78, and P.L. 112-96.


Date of Report: September 12, 2012
Number of Pages: 27
Order Number: R41662
Price: $29.95

To Order:

R41662.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Extending Unemployment Compensation Benefits During Recessions

Julie M. Whittaker
Specialist in Income Security

Katelin P. Isaacs
Analyst in Income Security

This report describes the history of temporary federal extensions to unemployment benefits from 1980 to the present. Among these extensions is the Emergency Unemployment Compensation (EUC08) program created by P.L. 110-252 (amended by P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L. 111-205, P.L. 111-312, P.L. 112-78, and P.L. 112- 96).

This report contains five sections. The first section provides background information on unemployment compensation (UC) benefits. It also provides a brief summary of UC benefit exhaustion and how exhaustion rates are related to the business cycle.

The second section provides the definition of a recession as well as the determination process for declaring a recession. It also provides information on the timing of all recessions since 1980.

The third section summarizes the legislative history of federal extensions of unemployment benefits. It includes information on the permanently authorized extended benefit (EB) program as well as information on temporary unemployment benefit extensions. It also includes a brief discussion on the role of extended unemployment benefits as part of an economic stimulus package.

The fourth section provides figures examining the timing of recessions and statistics that may be considered for determining extending unemployment benefits.

The fifth section briefly discusses previous methods for financing these temporary programs. In particular it attempts to identify provisions in temporary extension legislation that may have led to increases in revenue or decreases in spending related to unemployment benefits.


Date of Report: September 13, 2012
Number of Pages: 40
Order Number: RL34340
Price: $29.95

To Order:

RL34340.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions

Gene Falk
Specialist in Social Policy

The Temporary Assistance for Needy Families (TANF) block grant funds a wide range of benefits and services for low-income families with children. TANF was created in the 1996 welfare reform law (P.L. 104-193). This report responds to some frequently asked questions about TANF; it does not describe TANF rules (see, instead, CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements, by Gene Falk). 

TANF Funding. TANF provides fixed funding to states, the bulk of which is provided in a $16.5 billion-per-year basic block grant. States are required in total to contribute, from their own funds, at least $10.4 billion under a maintenance-of-effort (MOE) requirement. The basic block grant is not adjusted for inflation or changes in the cash welfare caseload (see “The Caseload,” below). It has lost 28% of its value to inflation from FY1997 through FY2011. 

State Spending. Though TANF is best known for funding cash welfare payments for needy families with children, the block grant and MOE funds are used for a wide variety of benefits and activities. In FY2011, expenditures on basic assistance (cash welfare) totaled $9.6 billion—28.8% of total federal TANF and MOE dollars. TANF also contributes funds for child care and services for children who have been, or are at risk of being, abused and neglected. 

Cash Welfare Caseload. A total of 1.9 million families, composed of 4.5 million recipients, received TANF- or MOE-funded cash in December 2011. The bulk of the “recipients” were children—3.4 million in that month. The cash welfare caseload is very heterogeneous. The type of family historically thought of as the “typical” cash welfare family—one with an unemployed adult recipient—accounted for less than half of all families on the rolls in FY2009. Additionally, 14.7% of cash welfare families had an employed adult, while almost half of all families had no adult recipient. Child-only families include those with disabled adults receiving Supplemental Security Income (SSI), adults who are nonparents (e.g., grandparents, aunts, uncles) caring for children, and families consisting of citizen children and ineligible noncitizen parents. 

Cash Welfare Benefits. TANF cash benefits are set by states. In July 2010, the maximum monthly benefit for a family of three ranged from $923 in Alaska to $170 in Mississippi. Benefits in all states represent a fraction of poverty-level income. In the median jurisdiction (District of Columbia), the maximum monthly benefit of $428 for a family of three represents 28% of poverty-level income. 

Cash Welfare Work Requirements. TANF requires states to engage 50% of all families and 90% of two-parent families in work activities. However, these standards are reduced by caseload reduction from FY2005. Further, states may get an extra credit against these standards by spending more than required under the TANF MOE. In FY2009, states achieved an all-family participation rate of 29.4% and a two-parent rate of 28.3%. That year, eight jurisdictions failed the all-family standard, and seven jurisdictions failed the two-parent standard. States that fail to meet work standards are at risk of being penalized by a reduction in their block grant.


Date of Report: September 11, 2012
Number of Pages: 37
Order Number: RL32670
Price: $29.95

To Order:

RL32670.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Unemployment: Issues in the 112th Congress

Jane G. Gravelle
Senior Specialist in Economic Policy

Thomas L. Hungerford
Specialist in Public Finance

Linda Levine
Specialist in Labor Economics

The longest and deepest recession since the Great Depression ended and an expansion began in June 2009. Although output started growing in the third quarter of 2009, the labor market was weak in 2010, with the unemployment rate averaging 9.6% for the year. Despite showing greater improvement toward the end of 2011, the unemployment rate averaged a still high 8.9% for the year. The labor market has continued to slowly strengthen in 2012, with the unemployment rate in August measuring 8.1%.

Several policy steps were taken after the economy entered the Great Recession, including stimulus bills in 2008 (P.L. 110-185) and 2009 (P.L. 111-5), an unprecedented expansion in direct assistance to the financial sector by the Federal Reserve, and the Troubled Asset Relief Program (TARP; P.L. 110-343). In December 2010, P.L. 111-312 extended the 2001 and 2003 “Bush” income tax cuts through 2012 as well as other expiring tax provisions and emergency unemployment benefits through 2011. The Tax Relief, Unemployment Reauthorization, and Job Creation Act also cut the payroll tax by two percentage points through 2011 as well.

Continued high unemployment in 2011 and 2012 has led to concerns about the need for additional policies to promote job creation. The President proposed a stimulus package in September 2011— the American Jobs Act—which was introduced by request in the House (H.R. 12) and Senate (S. 1549). The two percentage point payroll tax cut that was due to expire at the end of 2011 was extended into early 2012 as part of the Temporary Payroll Tax Cut Continuation Act (P.L. 112- 78). As agreed to by a conference committee in February 2012, the Middle Class Tax Relief and Job Creation Act (P.L. 112-96) includes among its provisions extending the payroll tax cut and emergency unemployment benefits through 2012.

More recently, attention has focused on the significant increase in taxes and decrease in spending at the end of 2012, popularly referred to as the “fiscal cliff.” Economic projections have suggested that these policies will dramatically slow growth and perhaps lead to a recession in the first part of 2013. Proposals have been made to extend some of the expiring tax cuts (H.R. 8, S. 3412, S. 3413, S. 3521) although there is disagreement about which cuts to extend.

This report considers three policy issues: whether to take additional measures to increase jobs, what measures might be most effective, and how job creation proposals should be financed. Most proposals discussed as part of a potential additional macroeconomic jobs bill are traditional fiscal stimulus policies. Their objective is to increase total spending in the economy (aggregate demand) either through direct government spending on programs or by providing funds to others that they will spend (through tax cuts, transfer payments, and aid to state and local governments). Proposals for employment tax credits are different from traditional fiscal policies in that their objective is to directly increase employment through a subsidy to labor costs.

To be effective, fiscal stimulus is generally deficit financed. Although a stimulus measure could be paid for by cutting other spending or raising other taxes, these financing options will offset the stimulative effects on aggregate demand. It is possible to choose a deficit-neutral package of tax and spending changes that would stimulate aggregate demand if some types of measures induce more spending per dollar of cost than others, but such an effect would likely not be very large. The choice of financing affects both the macroeconomic impact and the cost-benefit tradeoff of the policy proposal. If such an effective stimulus package could be designed, it would have the advantage of not exacerbating the challenges of a growing debt.


Date of Report: September 10, 2012
Number of Pages: 18
Order Number: R41578
Price: $29.95

To Order:

R41578.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Supervision of U.S. Payment, Clearing, and Settlement Systems: Designation of Financial Market Utilities (FMUs)

Marc Labonte
Specialist in Macroeconomic Policy

The U.S. financial system processes millions of transactions each day representing daily transfers of trillions of dollars, securities, and other assets to facilitate purchases and payments. Concerns had been raised, even prior to the recent financial crisis, about the vulnerability of the U.S. financial system to infrastructure failure. These concerns about the “plumbing” of the financial system were heightened following the market disruptions of the recent crisis.

The financial market infrastructure consists of the various systems, networks, and technological processes that are necessary for conducting and completing financial transactions. Title VIII of the Dodd-Frank Act, P.L. 111-203, the Payment, Clearing, and Settlement Supervision Act of 2010, introduces the term “financial market utility” (FMU or utility) for those multilateral systems that transfer, clear, or settle payments, securities, or other financial transactions among financial institutions (FI) or between an FMU and a financial institution. Utilities and FIs transfer funds and settle accounts with other financial institutions to facilitate normal day-to-day transactions occurring in the U.S. economy. Those transfers include payroll and mortgage payments, foreign currency exchanges, purchases of U.S. treasury bonds and corporate securities, and derivatives trades. Further, financial institutions engage in commercial paper and securities repurchase agreements (repo) markets that contribute to liquidity in the U.S. economy. In the United States, some of the key payment, clearing, and settlement (PCS) systems are operated by the Federal Reserve, and other systems are operated by private sector organizations.

With Title VIII of the Dodd-Frank Act, which was enacted on July 21, 2010, Congress added a new regulatory framework for the FMUs and PCS activities (of FIs) designated by the Financial Stability Oversight Council as systemically important. On July 18, 2012, the Council voted unanimously to designate eight FMUs as systemically important. Title VIII expands the Federal Reserve’s role, in coordination with those of other prudential regulators, in the supervision, examination, and rule enforcement with respect to those FMUs and PCS activities of financial institutions. Additionally, FMUs may borrow from the discount window of the Federal Reserve in certain unusual and exigent circumstances.

Although Title VIII primarily affects the scope of regulatory powers, certain provisions directly affect a utility’s business operations. For example, Title VIII allows FMUs to maintain accounts at a Federal Reserve Bank and provides access to the Fed’s discount window in unusual and exigent circumstances. Related to PCS, Title VII of the Dodd-Frank Act imposes requirements that will significantly affect the business of clearinghouses in the over-the-counter (OTC) derivatives (swaps) market. By requiring clearing of certain swap transactions through central counterparties (CCPs or clearinghouses), Title VII is expected to increase the volume of transactions processed by clearing systems subject to Title VIII.

Critics contend that Title VIII grants too much discretionary authority to the Fed in an area that they argue was not a source of systemic risk during the recent financial crisis. S. 3497 seeks to repeal Title VIII of the Dodd-Frank Act, stripping FSOC of it’s authority to designate FMUs as systemically important.

This report outlines the changes to the supervision of key market infrastructure that are embodied in the Dodd-Frank Act. It is intended to be used as a reference for those interested in the financial system’s “plumbing,” and how the associated systems are currently overseen and regulated.


Date of Report: September 10, 2012
Number of Pages: 37
Order Number: R41529
Price: $29.95

To Order:

R41529.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.