Weekly Briefing

The administration gives the “SCHIP treatment” to Trade Adjustment Assistance and unemployment insurance

By Rob Schofield 

Quick take:

• Two of the most important public safety nets for workers displaced by outsourcing and the rapid, ongoing shifts in the American and North Carolina economies are the Trade Adjustment Assistance (TAA) and unemployment insurance programs.
• Last week, the House Ways and Means Committee in Washington gave bi-partisan approval to a measure that would upgrade and modernize both programs.
• A recent Bush Administration letter, however, appears to confirm that the President will subject the legislation to the same extreme approach he has taken on children’s health insurance. As with SCHIP is appears that some North Carolina legislators will go along for the ride.

One-third plus one. That, by many accounts, is the magic number in Washington under the new bunker mentality approach to governing adopted by the Bush administration. After nearly seven “vetoless” years, the President has now done an about-face and opted to make the veto his number one domestic policy tool during the final 15 months in office.

Like a chess king headed for inevitable checkmate but moving back and forth from square to square to avoid capture, the President appears bent on doing whatever he can to stave off his opponents for as long as possible – regardless of the consequences for the Americans who might benefit from the programs that he and 34 senators (or 146 representatives) might oppose.

Displaced workers under fire

Kids lacking health insurance were the first group to receive the bunker treatment. Despite overwhelming support in the polls and the Congress, the President has refused to budge from his extreme, ideologically based opposition to SCHIP expansion. And because enough Republicans (including the entire North Carolina delegation) appear ready to stick with him to the bitter end, he is currently positioned to hold on to the one-third plus one margin that he needs to prevail.

Now, the next group in line to receive this treatment appears to be workers (and their families) who’ve become unemployed as the result of globalization – i.e., the rise of overseas outsourcing and the general decline of several domestic industries.  

Last week, the House Ways and Means Committee approved a bill that, like the SCHIP expansion, has been years in the making. The proposal is known as the “Trade and Globalization Assistance Act of 2007.” Like the vetoed SCHIP expansion, it takes several long sought steps to improve critical services and expand and modernize eligibility criteria that have denied access to many worthy people.   

Unfortunately, at the same time that a bipartisan group was approving the bill in committee, the administration released a letter through the Secretary of Labor that attacked the proposal on many of the same grounds that it used to oppose expansion of SCHIP: it’s too generous, it costs too much, it makes it too easy for people to receive benefits. Thus, while the bill could be approved by the full House of Representatives as early this week, supporters are very concerned that the measure could fall short of the veto-proof majority needed to overcome Administration opposition.

What’s at stake

As with the SCHIP proposal, the Trade and Globalization bill is principally about bringing essential services to worthy people so that they and their families might have better chances of living healthy and productive lives. Here are some of the key highlights of the legislation:

• The bill would expand trade adjustment assistance (which provides displaced workers with things like access to job training, income supports, and health insurance subsidies) to include service industry workers. Though obviously obsolete, the current law only covers workers in the manufacturing sector. Under the bill, service workers who lose their jobs because of layoffs that resulted from international trade (i.e., import competition or job “off shoring”) can be eligible for services.
• The bill would also improve coverage for displaced manufacturing workers by removing several illogical rules in current law. For instance, right now, a worker who loses his or her job when their factory moves to China may still not get TAA benefits unless it can be shown that the factory relocation will result in increased imports to the U.S. But, of course, many such factories produce goods for foreign markets. Obviously, the American workers are harmed just as much by the relocation whether imports are impacted or not.
• The bill would allow eligibility for workers in an entire industry in some instances. Current law requires a company by company determination that has produced scores of inconsistent and illogical results. In some instances, workers from one shuttered factory have received benefits while others from a shuttered factory that produced similar goods down the street have not.
• The bill would dramatically expand training funds and expand the number of weeks during which a worker can receive training.
• The bill would provide a larger health care tax credit. Right now, the subsidy for displaced workers is not large enough to make health insurance affordable. This was a problem for many of the workers who lost their jobs and health insurance coverage when Pillowtex closed its doors in Cabarrus County a few years ago. The bill would simplify rules and expand the credit to 85 percent of the cost of insurance.
• The bill would make several critical improvements to the unemployment insurance system.

The impact in North Carolina

As with SCHIP, the Trade and Globalization Act would be particularly beneficial to North Carolina. At last count – even under the current system – more North Carolina workers (almost 72,000) had been certified eligible for TAA services than any in other state. Given the state’s ongoing struggles with foreign competition, this number could rise dramatically under a revamped and expanded program.

In addition and as discussed at some length in a previous edition of the Weekly Briefing, North Carolina would also benefit greatly from the proposed changes to unemployment insurance. Under the Trade and Globalization bill (which has been amended to include the substance of the Unemployment Insurance Modernization Act), states would be provided with significant new monetary incentives to bring their unemployment insurance systems into the 21^st century.

Happily, because North Carolina has already adopted the vast majority of these modernization proposals (e.g. making the unemployment system friendlier to victims of domestic violence, part-time workers, and so-called “trailing spouses”) the state is in place to receive as much as a $200 million windfall if and when the new law is enacted. Such an influx of funds would have a tremendous impact on state’s ability to serve its large and rapidly changing workforce.

Going forward

Despite the large and obvious benefit that would inure to North Carolina from passage of the Trade and Globalization bill (and its bipartisan support), the state’s congressional delegation appears to remain divided on party lines. Though most members of the state’s delegation of both parties signed on to narrower trade relief bills earlier this year, at this point there has been no indication that any of the eight Republicans who voted against the highly popular SCHIP (Burr, Dole, Coble, Foxx, Hayes, Jones, McHenry, and Myrick) will buck the President’s bunker plan now.

In the days to come, let’s hope these lawmakers reconsider their positions and shift their loyalty from the President in his bunker to the workers in their home state.

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This entry was posted on Monday, October 29th, 2007 at 12:55 pm and is filed under Weekly Briefing. You can follow any responses to this entry through the RSS 2.0 feed.