Secretary of Labor Hilda L. Solis
Remarks for the Honorable Hilda L. Solis
Media Conference Call
Extending Unemployment Insurance & Payroll Tax Relief
Wednesday, December 14, 2011
Good afternoon. Two critical issues are likely to be decided in the coming days by Congress. First, Congress will decide whether or not to cut a lifeline to more than 5 million unemployed workers next year. And second, they will decide whether to raise payroll taxes on 160 million workers most of them middle class.
The House Republican proposal to gut unemployment benefits to pay for a payroll tax cut is cutting off our hand to spite our face. The American people deserve a clean vote on both of these measures, because each will help our economic recovery. I know congressional negotiators have a tough job in front of them to get this done before the holidays. But cutting unemployment benefits from 99 to 59 weeks would be bad for our labor force and our recovery. The House Republican proposal on the table vs. the President's proposal would result in 1 million Americans losing their benefits next year.
It would mean 1 million Americans no longer spending money on goods and services that are vital to our economic growth. By the same logic, the House proposal to eliminate the Non-Reduction Rule also would have a harmful effect. Eliminating this rule would allow states to slash benefits while getting the federal government to pay for extended benefits for claimants. If states are allowed to make these kinds of dramatic cuts, they could hamper our overall recovery.
As many of you know, we released a jobs report this month that showed our unemployment rate fell to 8.6 percent it's lowest level since the spring of 2009. We're moving in the right direction, but we have more to do. There are still millions of Americans who are out of work. There are still more than 4 unemployed people for every one job opening.
The Recovery Act introduced expanded UI benefits for our long-term unemployed. This was a lifeline to millions of unemployed workers. If you include their family members, this extension provided basic necessities to 50 million Americans, including 12 million children.
I've met many UI claimants. They are not free-loaders. They are hard-working people. They spend all day, every day, filling out applications, sending out resumes and looking for work. Cutting their lifeline as the holidays approach is not worthy of this great nation. If we help each other, we will help our economy bounce back.
When it comes to extending UI benefits, we know what works. We've seen it before. Last year, we extended emergency benefits for 7 million Americans. We saw an uptick in job creation and kept 3.2 million people from falling into poverty, according to the Census Bureau. Putting money into the pockets of unemployed workers will be a boost for state economies that are already suffering, and it will help the economy as a whole. We know that for every dollar in UI benefits handed out, nearly 2 dollars in economic activity is generated.
In every recession since 1957, Congress has created special programs to extend unemployment benefits. In recent history, extensions have lasted 2 to 3 years after the official end date of a recession. This not just about helping the unemployed; it's about helping our economy.
The same is true for payroll tax relief. Again, we had this same debate last year. Last year, payroll taxes were cut, and economists from both the left and right agree it helped our recovery. We should not raise them now.
On January 1st, unless Congress acts, that's what will happen. We need to make sure that 160 million hardworking Americans don't see their taxes go up in the new year. Most Americans can't afford to give up $1,000 right now. That's why President Obama wants to not only extend the payroll tax cut, he wants to expand it. His proposal would give the typical working family a tax cut of $1,500 next year.
It would be paid for it by asking a little more of millionaires and billionaires, but virtually every Senate Republican voted against this idea. Many have sworn an oath never to raise any taxes as long as they live, but it now appears some are willing to break that pledge where the middle class are concerned. It's time to stop playing politics and do right by our middle class workers and our long-term unemployed.
Now is not the time to turn our backs on them. They deserve action. Thank you for your time. I'm now joined on this call by my chief economist, Adriana Kugler, and we will be happy to take your questions.