WASHINGTON, DC – In an effort to boost the economy and prevent unemployment insurance expiring for 2 million Americans who have experienced long-term joblessness, U.S. Senator Jack Reed (D-RI) is introducing the Emergency Unemployment Compensation Extension Act.  This bill will provide relief for both states and struggling families by extending federal jobless benefits through 2012. 

“Unemployment benefits have a real impact.  They help individuals, businesses, and states and provide a major economic boost to the national economy as well,” said Reed.  “The number one thing businesses need to create jobs is an increase in consumer demand.  Extending unemployment insurance helps preserve and spur demand for local businesses by helping people pay their bills while they look for a new job.  It will prevent states and employers from facing automatic penalties for overdrawing on their unemployment insurance trust fund during the worst unemployment crisis in modern history.”

Fourteen million Americans are looking for work and the average length of unemployment is 40 weeks.  Rhode Island has endured especially high and persistent rates of unemployment.  If Congress fails to extend unemployment benefits or if benefits lapse for as little as a month - 10,000 Rhode Islanders and 2 million Americans nationwide will fall through the safety-net and lose benefits. 

“To help lower unemployment Congress should swiftly pass a comprehensive jobs bill.  But with continued filibusters of deficit-neutral job creation proposals, we need to make sure that out of work Rhode Islanders and their families have access to unemployment insurance,” said Reed.

The Emergency Unemployment Compensation Extension Act would provide relief for states and employers that have been hit the hardest by the unemployment crisis and whose unemployment trust funds have been subjected to historic levels of stress by providing a one year moratorium on interest payments for states and tax relief for employers in states with outstanding unemployment trust fund loans.

“Requiring states to make such interest repayments now, at a time when they face massive budget deficits and the economy is still weak does not make economic sense.  Nor does requiring businesses to pay an additional tax of $21 per employee for the 2011 tax year,” said Reed.  “This bill would provide immediate relief to struggling families across the country and certainty to 23 states with outstanding loans and all of their employers facing automatic tax increases that are otherwise set to be assessed as soon as January 31, 2012.”

For states that have remained solvent during this crisis, they would receive a 2% interest bonus on trust fund reserves for one year. 

"This is a proven, cost-effective investment that will be a real lifeline to struggling families and will help boost Rhode Island's economy.  Extending unemployment insurance is not just the right thing to do, it is a wise investment with a strong rate of return.  Unemployment insurance directly boosts every state's economy, at a time when state spending is necessarily constrained,” concluded Reed, who also noted that since the creation of the modern unemployment benefits system in 1935, Congress has never failed to act on extending benefits for the long-term unemployed while the national unemployment rate remains above 7.2 percent.  Today the national unemployment rate is 9.1% and in Rhode Island it is 10.5%.

Lead cosponsors of Reed’s bill include Senators Dick Durbin (D-IL) and Sheldon Whitehouse (D-RI).  U.S. Representatives Lloyd Doggett (D-TX) and Sander Levin (D-MI), the top Democrat on the House Ways and Means Committee, today submitted identical legislation in the House.