[Congressional Record Volume 157, Number 26 (Thursday, February 17, 2011)]
[Senate]
[Pages S885-S887]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Reed, and Mr. Brown of Ohio):
  S. 386. A bill to provide assistance to certain employers and States 
in 2011 and 2012, to improve the long-term solvency of the Unemployment 
Compensation program, and for other purposes; to the Committee on 
Finance.
  Mr. DURBIN. Mr. President, employers in several States, including 
Illinois, are facing an automatic tax increase if Congress doesn't do 
something. That is right. Businesses that are struggling in this 
recession face a Federal tax coming their way if we don't act.
  I am introducing a bill today that will prevent that. This is a time 
when we need to help businesses--small businesses in particular--to 
spend every dime they have on hiring people looking for work.
  Here is why I am introducing the bill.
  Current law requires States that have overdrawn their unemployment 
insurance trust funds to raise taxes on employers to fill that deficit. 
The recession put tens of millions of Americans out of work, and the 
number of people who have been unable to find new work for more than 6 
months is unprecedented in recent history. Unemployment insurance has 
helped these families through a difficult time, and it has been a good 
investment. It is money that has been given to the unemployed that is 
quickly put back into the economy, creating demands for goods and 
services.
  The Congressional Budget Office ranks unemployment benefit payments 
as one of the most stimulative things we can do to turn this economy 
around. So we know it is good economics. That spending is going to help 
drive up demand for what private companies sell, which encourages them 
to hire more workers. But the ferocity of the economic downturn has 
strained the unemployment insurance trust fund in many States.
  Let me be clear. This problem has nothing to do with the operating 
deficits many States are facing. That is a bigger but unrelated 
problem. The UI trust funds can only be used by States to pay 
unemployment insurance, and it is these trust funds that we need to 
return to solvency. That is what the Unemployment Insurance Solvency 
Act, which I have introduced, would do.
  Here is what it specifically sets out to accomplish:
  First, it would waive the requirement that States immediately charge 
local employers higher taxes for the next 2 years. This would save 
companies located in my State of Illinois, for example, over $300 
billion over the next 2 years and save businesses nationwide between $8 
billion and $11 billion between now and the end of 2013.
  Second, it would waive the interest payments that States would 
otherwise be required to pay for the next 2 years. That is going to 
save Illinois $200 million in interest payments over the next 2 years.
  Finally, it gives States--Governors, State legislatures, and local 
employers working together--greater flexibility in figuring out how to 
replenish their unemployment trust fund starting in 2014.
  It would give States three options to explore: First, to restructure 
their UI tax base and rates to fill any hole in the trust fund; second, 
seek forgiveness from the Federal Government for a portion of the debts 
the State might owe to its trust fund in return for entering into a 
long-term solvency plan with the Department of Labor to protect the 
interests of the jobless who need unemployment insurance; third, 
maintain existing solvency that a State has already achieved, earning 
higher Federal UI interest payments and lower Federal UI taxes for its 
employers.
  The President included a version of this proposal in his budget he 
submitted to Congress on Monday. I commend him for it.
  With 13.9 million people out of work and $14 trillion in Federal 
debt, we need to find creative solutions to solve problems facing 
workers and employers. This bill I have introduced, cosponsored by 
Senator Jack Reed of Rhode Island and Senator Sherrod Brown of Ohio, is 
one that I think addresses this issue in a proper manner. It removes 
this new burden on small businesses, a tax burden which can only hold 
them back from hiring the people they need and reducing unemployment, 
and it gives to States that are hard-pressed because of other financial 
problems at least 2 years where they don't need to pay the interest 
they owe on the money for unemployment insurance. It is a stopgap 
emergency measure supported by the Obama administration which I am 
happy to introduce.
  This bill will prevent immediate tax increases on employers. It 
ensures unemployment insurance will be there when workers need it. And 
it does not raise the Federal debt. I urge my colleagues to support it.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 386

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page S886]]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Unemployment Insurance Solvency Act of 2011''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Extension of assistance for States with advances.
Sec. 3. Reduction in the rate of employer taxes.
Sec. 4. Modifications of employer credit reductions.
Sec. 5. Increase in the taxable wage base.
Sec. 6. Voluntary State agreements to abate principal on Federal loans.
Sec. 7. Rewards and incentives for solvent States and employers in 
              those States.

     SEC. 2. EXTENSION OF ASSISTANCE FOR STATES WITH ADVANCES.

       (a) In General.--Section 1202(b)(10)(A) of the Social 
     Security Act (42 U.S.C. 1322(b)(10)(A)) is amended by 
     striking ``2010'' and inserting ``2012'' in the matter 
     preceding clause (i).
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of section 
     2004 of the Assistance for Unemployed Workers and Struggling 
     Families Act (Public Law 111-5; 123 Stat. 443).

     SEC. 3. REDUCTION IN THE RATE OF EMPLOYER TAXES.

       (a) In General.--Section 3301 of the Internal Revenue Code 
     of 1986 is amended--
       (1) in paragraph (1), by striking ``2010 and the first 6 
     months of calendar year 2011'' and inserting ``2013''; and
       (2) in paragraph (2), by striking ``6.0 percent in the case 
     of the remainder of calendar year 2011'' and inserting ``5.78 
     percent in the case of calendar year 2014''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the earlier of--
       (1) the date of the enactment of this Act; or
       (2) July 1, 2011.

     SEC. 4. MODIFICATIONS OF EMPLOYER CREDIT REDUCTIONS.

       (a) Limit on Total Credits.--Section 3302(c) of the 
     Internal Revenue Code of 1986 is amended--
       (1) in paragraph (1), by striking ``90 percent of the tax 
     against which such credits are allowable'' and inserting ``an 
     amount equal to 5.4 percent of the total wages (as defined in 
     section 3306(b)) paid by such taxpayer during the calendar 
     year with respect to employment (as defined in section 
     3306(c))''; and
       (2) in paragraph (2)--
       (A) by striking subparagraphs (B) and (C) and the flush 
     matter following subparagraph (C);
       (B) by striking ``(2) If'' and inserting ``(2)(A) If'';
       (C) by striking ``(A)(i) in'' and inserting ``(i) in'';
       (D) in clause (i) of subparagraph (A), as redesignated by 
     subparagraph (C), by striking ``5 percent of the tax imposed 
     by section 3301 with respect to the wages paid by such 
     taxpayer during such taxable year which are attributable to 
     such State'' and inserting ``an amount equal to 0.3 percent 
     of the total wages (as defined in section 3306(b)) paid by 
     such taxpayer during the calendar year with respect to 
     employment (as defined in section 3306(c))'';
       (E) in clause (ii) of subparagraph (A)--
       (i) by moving such clause 2 ems to the left;
       (ii) by striking ``5 percent, for each such succeeding 
     taxable year, of the tax imposed by section 3301 with respect 
     to the wages paid by such taxpayer during such taxable year 
     which are attributable to such State;'' and inserting ``an 
     amount equal to 0.3 percent of the total wages (as defined in 
     section 3306(b)) paid by such taxpayer during the calendar 
     year with respect to employment (as defined in section 
     3306(c)), for each succeeding taxable year;''; and
       (iii) by striking the semicolon at the end and inserting a 
     period; and
       (F) by adding at the end the following new subparagraph:
       ``(B) The provisions of subparagraph (A) shall be applied 
     with respect to the taxable year beginning January 1, 2011, 
     or any succeeding taxable year by deeming January 1, 2013 to 
     be the first January 1 occurring after January 1, 2010. For 
     purposes of subparagraph (A), consecutive taxable years in 
     the period commencing January 1, 2013, shall be determined as 
     if the taxable year which begins on January 1, 2013, were the 
     taxable year immediately succeeding the taxable year which 
     began on January 1, 2010. No taxpayer shall be subject to 
     credit reductions under this paragraph for taxable years 
     beginning January 1, 2011 and January 1, 2012.''.
       (b) Definitions and Special Rules.--Section 3302(d) of the 
     Internal Revenue Code of 1986 is amended--
       (1) by striking paragraphs (1), (4), (5), (6), and (7); and
       (2) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if enacted on January 1, 2011.

     SEC. 5. INCREASE IN THE TAXABLE WAGE BASE.

       (a) In General.--Section 3306 of the Internal Revenue Code 
     of 1986 is amended--
       (1) in subsection (b), by striking ``$7,000'' both places 
     it appears and inserting ``the applicable wage base amount 
     (as defined in subsection (v)(1))''; and
       (2) by adding at the end the following new subsection:
       ``(v) Applicable Wage Base Amount.--
       ``(1) In general.--For purposes of subsection (b)(1), the 
     term `applicable wage base amount' means--
       ``(A) for a calendar year before calendar year 2014, 
     $7,000;
       ``(B) for calendar year 2014, $15,000; and
       ``(C) for calendar years beginning on or after January 1, 
     2015, the amount determined under paragraph (2).
       ``(2) Amount for calendar year 2015 and thereafter.--
       ``(A) Amount.--
       ``(i) In general.--For purposes of paragraph (1)(C), the 
     amount determined under this paragraph for a calendar year is 
     an amount equal to the product of--

       ``(I) the amount of average wage growth for the year (as 
     determined in accordance with subparagraph (B)); and
       ``(II) the applicable wage base amount for the preceding 
     calendar year.

       ``(ii) Rounding.--If the amount determined under clause (i) 
     is not a multiple of $100, such amount shall be rounded to 
     the next higher multiple of $100.
       ``(B) Average wage growth.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     amount of annual wage growth for a calendar year shall be 
     determined by dividing the average annual wage in the United 
     States for the 12-month period ending on the June 30 of the 
     preceding calendar year by the average annual wage in the 
     United States for the 12-month period ending on the second 
     prior June 30, and rounding such ratio to the fifth decimal 
     place.
       ``(ii) Average annual wage.--For purposes of clause (i), 
     using data from the Quarterly Census of Employment and Wages 
     (or a successor program), the average annual wage for a 12-
     month period shall be determined by dividing the total 
     covered wages subject to contributions under all State 
     unemployment compensation laws for such period by the average 
     covered employment subject to contributions under all State 
     unemployment compensation laws for such period, and rounding 
     the result to the nearest whole dollar.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 6. VOLUNTARY STATE AGREEMENTS TO ABATE PRINCIPAL ON 
                   FEDERAL LOANS.

       (a) In General.--Section 1203 of the Social Security Act 
     (42 U.S.C. 1323) is amended--
       (1) by inserting ``(a) Advances.--'' after ``1203''; and
       (2) by adding at the end the following new subsection:
       ``(b) Voluntary Abatement Agreements.--
       ``(1) In general.--The governor of any State that has 
     outstanding repayable advances from the Federal unemployment 
     account pursuant to subsection (a) may apply to the Secretary 
     of Labor to enter into a voluntary principal abatement 
     agreement.
       ``(2) Contents of application.--An application described in 
     paragraph (1) shall include a plan that, based upon 
     reasonable economic projections, describes how the State 
     will, within a reasonable period of time--
       ``(A) repay the outstanding principal on its remaining 
     advance to the Federal unemployment account, less the amount 
     of the principal abatement pursuant to paragraph (4); and
       ``(B) restore the solvency of the State's account in the 
     Unemployment Trust Fund to an average high cost multiple of 
     1.0, as calculated and defined by the United States 
     Department of Labor.
       ``(3) Requirement for plan.--A plan described in paragraph 
     (2) shall be premised on the existing unemployment 
     compensation law of the State and may take into consideration 
     the enactment of any changes in law scheduled to become 
     effective during the life of the plan.
       ``(4) Agreement.--Upon review of the application and 
     satisfaction that the State's plan will meet the repayment 
     and solvency goals described in paragraph (2), the Secretary 
     of Labor may enter into a principal abatement agreement with 
     the State. Such an agreement shall be for a period of no more 
     than 7 years.
       ``(5) Calculation.--Under any voluntary abatement agreement 
     under this subsection, the amount of principal abatement 
     shall be calculated as follows:
       ``(A) The State's repayable advances as of the date of the 
     enactment of this subsection or December 31, 2011, whichever 
     is earlier, shall be multiplied by a loan forgiveness 
     multiplier.
       ``(B) The State's loan forgiveness multiplier shall be 
     calculated on the same basis as the temporary increase of 
     Medicaid FMAP under section 5001(c)(2)(A) of division B of 
     the American Recovery and Reinvestment Act of 2009, using the 
     State's additional FMAP tier as of December 31, 2010. In the 
     case of a State that meets the criteria described in--
       ``(i) clause (i) of such section 5001(c)(2)(A), the loan 
     multiplier shall be 0.2.
       ``(ii) clause (ii) of such section 5001(c)(2)(A), the loan 
     multiplier shall be 0.4.
       ``(iii) clause (iii) of such section 5001(c)(2)(A), the 
     loan multiplier shall be 0.6.
       ``(C) The annual amount of principal abatement shall equal 
     one-seventh of the total amount of principal abatement.
       ``(6) Certification.--Under any voluntary abatement 
     agreement under this subsection,

[[Page S887]]

     the State shall certify that during the period of the 
     agreement--
       ``(A) the method governing the computation of regular 
     unemployment compensation under the State law of the State 
     will not be modified in a manner such that the average weekly 
     benefit amount of regular unemployment compensation which 
     will be payable during the period of the agreement will be 
     less than the average weekly benefit amount of regular 
     unemployment compensation which would have otherwise been 
     payable under the State law as in effect on the date of the 
     enactment of this subsection;
       ``(B) State law will not be modified in a manner such that 
     any unemployed individual who would be eligible for regular 
     unemployment compensation under the State law in effect on 
     such date of enactment would be ineligible for regular 
     unemployment compensation during the period of the agreement 
     or would be subject to any disqualification during the period 
     of the agreement that the individual would not have been 
     subject to under the State law in effect on such date of 
     enactment;
       ``(C) State law will not be modified in a manner such that 
     the maximum amount of regular unemployment compensation that 
     any unemployed individual would be eligible to receive in a 
     benefit year during the period of the agreement will be less 
     than the maximum amount of regular unemployment compensation 
     that the individual would have been eligible to receive 
     during a benefit year under the State law in effect on such 
     date of enactment; and
       ``(D) upon a determination by the Secretary of Labor that 
     the State has modified State law in a manner inconsistent 
     with the certification described in the preceding provisions 
     of this paragraph or has failed to comply with any 
     certifications required by this paragraph, the State shall be 
     liable for any principal previously abated under the 
     agreement.
       ``(7) Transfer.--Under a voluntary abatement agreement 
     under this subsection, a transfer of the annual amount of the 
     principal abatement shall be made to the State's account in 
     the Unemployment Trust Fund on December 31st of the year in 
     which the agreement is executed so long as the State has 
     complied with the terms of the agreement. For each subsequent 
     year that the Secretary of Labor certifies that the State is 
     in compliance with the terms of the agreement, the annual 
     amount of the State's principal abatement will be credited to 
     its outstanding loan balance. If the loan balance reaches 
     zero while the State still has a remaining principal 
     abatement amount, the remaining amount shall be made as a 
     positive balance transfer to the State's account in the 
     Unemployment Trust Fund.
       ``(8) Regulations.--The Secretary of Labor shall promulgate 
     such regulations as are necessary to implement this 
     subsection. Such regulations shall include--
       ``(A) standards prescribing a reasonable period of time for 
     a State plan to reach a solvency level equal to an average 
     high cost multiple of 1.0, taking into account the economic 
     conditions and level of insolvency of the State,; and
       ``(B) guidelines for insuring progress toward solvency for 
     States with agreements that include plans that require more 
     than 7 years to reach an average high cost multiple of 
     1.0.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 7. REWARDS AND INCENTIVES FOR SOLVENT STATES AND 
                   EMPLOYERS IN THOSE STATES.

       (a) Increased Interest for Solvent States.--
       (1) In general.--Section 904(e) of the Social Security Act 
     (42 U.S.C. 1104(e)) is amended by adding at the end the 
     following new flush sentences:
     ``The separate book account for each State agency shall be 
     augmented by 0.5 percent over the rate of interest provided 
     in subsection (b) when the State maintains reserves in the 
     account that equal or exceed an average high cost multiple of 
     1.0 as defined by the Secretary of Labor as of December 31st 
     of the preceding year. The State may apply the additional 
     funds to support State administration pursuant to the 
     requirements in section 903(c).''.
       (b) Lower Rate of Tax for Solvent States.--
       (1) In general.--Section 3301 of the Internal Revenue Code 
     of 1986, as amended by section 3, is amended by adding at the 
     end the following new sentence: ``For the second 6-month 
     period of 2011 or for each calendar year thereafter, in the 
     case of a State that maintains reserves in the State's 
     separate book account that equal or exceed an average high 
     cost multiple of 1.0 as of December 31st of the year 
     preceding the period or year involved, paragraph (1) shall be 
     applied for such period or year in the State by substituting 
     `6.0 percent' for `6.2 percent' or, as the case may be, 
     paragraph (2) shall be applied for such period or year in the 
     State by substituting `5.68 percent' for `5.78 percent'.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect on the earlier of--
       (A) the date of the enactment of this Act; or
       (B) July 1, 2011.
                                 ______