[Congressional Record (Bound Edition), Volume 154 (2008), Part 13]
[Extensions of Remarks]
[Pages 17942-17943]
[From the U.S. Government Publishing Office, www.gpo.gov]




             INTRODUCTION OF THE WORKER SAVINGS ACCOUNT ACT

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                         Friday, August 1, 2008

  Mr. McHUGH. Madam Speaker, I rise today to introduce legislation, the 
Worker Savings Account Act of 2008, which is designed to help Americans 
should they become unemployed.
  American workers today are less likely to spend their careers with a 
single employer, particularly as United States companies face 
increasing global competition. These forces--technological advances, 
increased trade, lower transportation costs, and enhanced 
communications--have greatly facilitated the movement of jobs offshore, 
including both services and high-skilled sectors. Corporations have 
sought to streamline their operations through technological 
innovations, outsourcing, lay-offs, and moving to lower-cost locations. 
Not surprisingly, the total number of U.S. manufacturing jobs has 
fallen by 1.8 million since November 2001, from 15.8 million to 14 
million.
  The loss of employment is not limited to those impacted by the global 
economy, but is something virtually every worker could experience. In 
fact, 19 million Americans were laid off or discharged from their 
employment in 2006. A 2005 Government Accountability Office (GAO) 
report found that 85 percent of American workers born between 1957 and 
1964 were unemployed at least once between 1979 and 2002.
  There are a variety of benefits that may be available to Americans to 
help them during times of unemployment. These include those provided 
through the Unemployment Compensation (UC), Trade Adjustment Act (TAA), 
Alternative Trade Adjustment Act (ATAA), Disaster Unemployment 
Assistance (DUA), and the Workforce Investment Act (WIA) programs.
  For example, the UC program is the cornerstone of the government's 
efforts to assist unemployed workers with their continued income needs. 
Established in 1935, the UC program provides critical support to 
covered workers who become involuntarily unemployed. In December 2007, 
approximately 2.7 million unemployed workers received UC benefits in a 
given week.

[[Page 17943]]

  The average weekly UC recipient currently gets $281 and monies are 
usually available for up to 26 weeks, although this Congress recently 
enacted legislation with my support to temporarily provide an 
additional 13 weeks. In fiscal year 2007, the average regular UC 
benefit duration was 15 weeks or almost four months. When one considers 
rising costs, particularly for gasoline and food, it is not surprising 
that some estimates indicate that about 42 million Americans are living 
paycheck to paycheck. It is clear that many of our citizens are not 
well prepared for periods of unemployment. This is particularly evident 
when one notes that financial planners often advise people to build up 
three to six months in emergency savings to cover necessities such as 
monthly mortgage and car payments, utilities, insurance, food, home 
maintenance, and health care.
  The Worker Savings Account Act is designed to help Americans enhance 
their personal safety nets. The measure would allow people to establish 
Worker Savings Accounts (WSAs) to supplement the benefits they might 
otherwise receive while unemployed including assistance received 
through the UC, TAA, ATAA, DUA, and WIA programs. Moreover, the Act 
clearly states that a person's decision to have a WSA shall in no way 
diminish their entitlement to receive those payments.
  Like traditional Individual Retirement Accounts (IRAs), WSAs would 
have an annual contribution limit of $5,000, indexed to inflation. 
However, employers would be able to provide matching contributions of 
up to $5,000 annually. Contributions to WSAs would be permitted until 
the account owner actually elects to take Social Security retirement 
benefits. At that time, a WSA account owner could choose to roll over 
their WSA funds into a 401(k) or IRA; alternatively, the WSA funds 
could be withdrawn without penalty but subject to taxation. Prior to a 
WSA account owner's decision to take Social Security payments, WSA 
funds could be withdrawn without penalty and tax-free as long as the 
owner lost their employment through no fault of their own or they had 
become disabled.
  To encourage lower-income Americans to take advantage of the 
opportunity to contribute to WSAs, the Worker Savings Account Act would 
provide a refundable tax credit of up to $1,000 for eligible 
individuals. This tax credit would be indexed to inflation and 
recipients could receive up to $5,000 over the course of their career.
  Madam Speaker, while this legislation would help every American build 
or enhance their personal safety net, it would be particularly helpful 
to my constituents. To illustrate, in June 2008, five of the 11 
counties I represent in Northern and Central New York had unemployment 
figures that exceeded the national and state rates. Accordingly, I ask 
my colleagues to join with me as I work to enact the Worker Savings 
Account Act of 2008.

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