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Talking Points of Congressional Testimony September 7, 2000 by Raymond J. Uhalde



  •  Madam Chairwoman and Members of the Subcommittee.
  •  Thank you once again for the opportunity to address the Subcommittee on reform of the unemployment insurance (UI) and employment service (ES) programs.
  •  Although your last hearing on this topic was not very long ago -- just February 29th -- there have been positive developments since that time.
  •  As you can see, we are all sitting together today instead of on separate panels.
  •  I believe that the last hearing and the efforts of this Subcommittee contributed greatly to the progress that has been made, and I would like to acknowledge and thank you for that role.
  •  I am extremely pleased and excited to be here today because this is an historic event -- an event that many believed could not happen.
  •  On June 27, with the participation of the Department of Labor, the Interstate Conference of Employment Security Agencies (ICESA), UWC, organized labor, and representatives from a State-business employment security reform coalition reached agreement on the elements of a comprehensive reform proposal that could garner bipartisan support.
  •  The Administration believes that the hard work and policy accommodations made by the parties who worked on this proposal have resulted in a package that meets the objectives established for the reform effort, and we are eager to work with Congress to move this forward and work out the technical details.


  •  As you know, reform of the UI and ES systems has been a topic of discussion at the national level for some time. My prepared statement outlines many of these efforts.


  •  This proposal sets a sound framework to secure program reform and adequate funding because it addresses the major concerns of the partners and stakeholders, and, we anticipate, will garner broad and bi-partisan support.
  •  This is a unique agreement in the history of these programs. The advantages of this proposal include:
    •  helping about 600,000 more of today's workers each year, especially women and low-wage workers access unemployment benefits -- without increasing State taxes in the near term -- and improving the recession readiness of the UI program;
    •  ensuring that about 600,000 more unemployed workers annually receive the reemployment services they need;
    •  improving the recession readiness of the UI program;
    •  cutting employer Federal unemployment taxes by $1.75 billion per year -- nearly $13 billion over the next seven years; and
    •  providing adequate resources to fund the program service needs for UI and ES within America's Workforce Network.
  •  My written testimony describes why the Administration believes this proposal meets the objectives of the reform effort. The key features include:
    • Making extended benefits more responsive during recessions,
    • Expanding benefits to many part-time workers,
    • Making more recent wages available for determining benefit eligibility,
    • Repealing the 0.2 percent Federal Unemployment Tax Act (FUTA) surcharge, and
    •  Improving administrative funding.
  •  Changing the budget structure presents challenges for both the Congress and the Administration, but we recognize, as you do, that these programs have unique features:
    •  A separate, dedicated Federal payroll tax is levied to fund their administration.
    •  When Federal accounts in the UTF exceed their ceilings, these "surplus" funds are distributed to State accounts in the UTF, can be used for administration, and are from the mandatory side of the budget.
    •  The benefit side of the UI program is self-financing through State taxes; many other federally supported social benefit programs are fully financed by Federal taxes.
  •  The Workgroup believes these unique features justify moving the funding for these programs out from under the discretionary caps. We would add that if such changes are made, we believe it is essential that the proper budgetary review and controls exercised by the Department and Congress be maintained.
  •  I also note that the Senate Appropriations Committee acknowledged the problem of UI benefits being classified as mandatory while operational costs are discretionary, and included report language in the FY 2001 budget seeking a solution to this problem with the authorizing committees.


  •  Clearly this is an ambitious package of proposals, and we recognize the challenges that face us in making these reforms a reality.
  •  Time is short, and there is much legislative business to be completed.
  •  However, with the workgroup's enthusiasm and bipartisan support, we believe that it should be possible to achieve enactment this year.


  •  Before closing, I want to thank you, Madam Chair, and Members of the Subcommittee for your support in this very important endeavor and also for your request to Appropriations Subcommittee Chairman Porter urging the Subcommittee to provide increased funding for the administration of our Nation's employment security system.
  •  Madam Chair, this concludes my formal remarks. I look forward to the testimony of my colleagues, and I will be glad to respond to any questions you or Members of the Subcommittee may have.