Capitol Hill Reports - Unemployment Extension Nears Finish Line in Senate

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Unemployment Extension Nears Finish Line in Senate
Monday, November 2, 2009
6:15 PM

The Senate today voted 85 to 2 to end debate on a substitute amendment to the House-passed Unemployment Compensation Extension Act (H.R. 3548) that would provide up to 14 additional weeks of emergency unemployment benefits for all 50 states and another six weeks -- for a total of 20 weeks -- of benefits for states where unemployment is 8.5 percent or higher. As passed by the House, H.R. 3548 would provide a 13-week extension for only 27 states that are experiencing unemployment rates at or above 8.5 percent.

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The Senate substitute package, drafted by Finance Committee Chairman Max Baucus (D-MT) and backed by Majority Leader Harry Reid (D-NV), also contains language based on a proposal by Sen. Johnny Isakson (R-GA) that would extend and expand the first-time homebuyer tax credit. Specifically, the provision would continue the $8,000 first-time homebuyer credit through April 30, 2010, and allow a $6,500 credit for homebuyers who have lived in their current residences for five years or more.

The substitute legislation also would allow U.S. companies of every size to carry back net operating losses incurred in either 2008 or 2009 against income earned in any of the five prior years (limited to 50 percent of companies' income in the fifth year).

Inclusion of the tax breaks did not placate all Senate Republicans, however, as some continued to argue that the Democratic leadership was obstructing their right to offer amendments. "If we are really going to act like the Senate... Then we need to stop this," said Sen. Mike Johanns (R-NE), referring to Reid's procedural move last week to "fill the amendment tree."

Baucus countered that most Americans are more concerned about jobs than parliamentary procedure. "This amendment would help to speed the recovery from the Great Recession," Baucus said. "It would help to improve our economy, and it would help the American people."

While the unemployment benefits extension is fully paid for via an extension of the federal unemployment tax, the homebuyer tax credit and "carryback" provisions are partially offset by delaying implementation of a tax break for multinational corporations with respect to worldwide allocation of interest, and increasing the penalty for failure to file a partnership or S corporation tax return.

Today's vote has all but cleared the way for Senate passage this week, although Republicans are expected to force another "cloture vote" on the underlying bill, a move that would push a final vote to later in the week. Once the Senate clears its substitute legislation, the House could agree to the Senate's changes and subsequently send the bill to President Obama's desk. Otherwise, the two chambers would have to negotiate a final version by means of a conference committee.