Summary

On November 17, 2008, Majority Leader Reid introduced S. 3688, the Unemployment Compensation Extension Act of 2008, which was placed on the Senate Legislative Calendar on November 19.   Drafted in response to the nation's rapidly increasing unemployment rate, which has grown from 4.8 to 6.5 percent since last year, and the threatened collapse of the nation's auto industry, the bill would extend unemployment insurance and provide $25 million in loans for the auto industry.  Without this legislation, more than one million Americans will run out of their current unemployment insurance benefits by the end 2008 and more than 2.5 million jobs could be lost next year. 

In October, the House passed H.R. 6867, the Unemployment Compensation Extension Act of 2008 on a vote of 368 to 28, which includes unemployment insurance extension provisions identical to those in Title I of S. 3688.  H.R. 6867 was also placed on the Senate Legislative Calendar on November 18.

It is anticipated that the Senate will consider S. 3688 during the week of November 17. 

Major Provisions

Title I -- Unemployment Compensation

S. 3688 would amend the Emergency Unemployment Compensation program created in the Supplemental Appropriations Act, 2008 (P.L. 110-252) to provide seven additional weeks of extended benefits for those who have exhausted their unemployment insurance benefits.  The measure would also provide 13 more weeks of unemployment benefits for workers in states with high unemployment, defined as a three month average of six percent or higher.  Moreover, the measure would provide temporary federal matching funds for the first week of extended benefits for states (twenty-five) that do not require a one-week waiting period.

The bill would provide approximately $6 billion in benefits.  These benefits would be paid for through the existing federal unemployment trust fund.

Title II -- Automobile Industry Emergency Assistance

S. 3688 would amend the Emergency Economic Stabilization Act of 2008 (EESA, P.L. 110-343) to direct the Treasury Secretary to provide $25 billion in direct bridge loans to automobile manufacturers and component suppliers.  The $25 billion for these loans would count against the third tranche of the $700 billion provided under EESA, but would not trigger the procedures required for release of the second $350 billion.

S. 3688 would provide robust oversight of the bridge loans to automobile manufacturers and component suppliers, including:

·         Requiring loan recipients to detail how they would use the funds to ensure their long-term financial viability and improve their ability to produce energy-efficient, advanced-technology vehicles.

·         Mandating that the government receive an equity stake from each loan recipient.  This is analogous to the EESA provisions that ensure taxpayers benefit when a company's stock appreciates.  The companies will be charged five percent interest for the first 5 years and then nine percent interest after that.

·         Requiring companies that receive the loans to place limits on executive compensation, including prohibiting golden parachutes.  Moreover, beyond the limits placed on other EESA beneficiaries, the legislation would prohibit bonuses to executives whose base pay exceeds $250,000 annually.

·         Prohibiting beneficiaries from paying dividends to common stockholders for the duration of the loan. 

 The loan program would be subject to the same reporting oversight and audit requirements as the Troubled Asset Relief Program (TARP) under EESA.  It would also be subject to the oversight of the TARP Special Inspector General and the Congressional Oversight Panel.

Legislative History

On November 17, 2008, Majority Leader Reid introduced S. 3688, the Unemployment Compensation Extension Act of 2008, which was placed on the Senate Legislative Calendar on November 19.  It is anticipated that the Senate will consider this legislation later in the week. 

S. 3688 is the latest in a series of measures to repair and boost the American economy.  In February, Congress passed the Economic Stimulus Act of 2008 (P.L. 110-185).  The bill was an early response to the nation's emerging economic downtown.  It provided a $300 to $600 rebate and a $300 per child tax credit; helped families at risk of foreclosure by expanding mortgage financing opportunities; and promoted job-creating business investments by providing tax relief for American businesses, especially small businesses.  In June, Congress passed an emergency extension of unemployment benefits as part of the Supplemental Appropriations Act, 2008 (P.L. 110-252).  In July, Congress passed the Housing and Economic Recovery Act of 2008 (P.L. 110-289), a comprehensive legislative package to help American homeowners and stabilize the housing markets while maintaining fiscal responsibility.  

In September, faced with increased long term unemployment and a deepening economic crisis, Congress began consideration of a second economic recovery package.  The House passed H.R. 7110, the Job Creation and Unemployment Relief Act of 2008, on a vote of 264 to 158, and the Senate attempted to pass a similar measure, S. 3604, the Economic Recovery Act of 2008.  S. 3604 would have further extended unemployment insurance, but would have also addressed state budget shortfalls, rising food and energy costs, our nation's crumbling infrastructure in an effort to spur job creation.  Unfortunately, Senate Republicans blocked further consideration of S. 3604 on a 52 to 42 vote (60 required). 

In October, the House passed H.R. 6867, the Unemployment Compensation Extension Act of 2008 on a vote of 368 to 28, which includes unemployment insurance extension provisions identical to those in Title I of S. 3688.  H.R. 6867 was also placed on the Senate Legislative Calendar on November 18.

Given the economy's continued decline, Senate Democrats are working to pass an updated version of the Economic Recovery Act of 2008 (S. 3689), which would also include auto-loan rescue provisions, during the week of November 17.  If that effort is blocked, Senate Democrats will work to pass S. 3688 or H.R. 6867 in an effort build upon earlier recovery measures and get the nation's economy working again. 

Expected Amendments

At the time of this writing, no amendments are expected to S. 3688.

Administration Position

At the time of this writing, no Statement of Administration Position has been issued for S. 3688.