Jobless benefits, tax credit extended

WASHINGTON — Congress on Thursday decisively approved an extension of unemployment benefits for almost 2 million people out of work nearly a year or more as the U.S. continues to lose jobs.

The White House quickly announced that President Obama would sign the bill today.

The measure cleared the House 403-12 on Thursday, a day after it won unanimous support in the Senate. The legislation would provide 14 additional weeks of unemployment benefits in all states, plus another six weeks in those with jobless rates topping 8.5 percent, including Washington state.

About 1.9 million Americans will exhaust their unemployment benefits by the end of this year without the bill, the Labor Department said. The national jobless rate is now 9.8 percent.

The fourth extension passed by Congress in the past 18 months would stretch federal aid to a maximum of 99 weeks, well beyond the extent of government intervention during past economic downturns. During the 1970s, the out-of-work were entitled to up to 65 weeks of assistance.

The latest congressional action comes as the prospects for the out-of-work remain bleak despite signs of economic recovery. New job-market figures are coming out today, and economists are expecting tens of thousands of new job losses.

The legislation also included several tax credits designed to get the economy back on track: It extends for seven months the $8,000 credit for first-time homebuyers that is set to expire this month and expands that program with a $6,500 credit for purchases by homeowners who have lived in their current residences at least five years.

Help for businesses

It also includes a business tax break that allows money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February.

The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S. Chamber of Commerce has been a big backer of the tax break for money-losing companies.

"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

Sobering job figures

Supporters cite sobering figures in stressing the need for the unemployment legislation: more than a third of the 15 million jobless have been looking for work for six months or more, a record level; 7,000 people are exhausting their benefits every day and there are some six job seekers for every job opening.

The National Employment Law Project says 600,000 lost their unemployment checks, which average about $300 a week, in September and October.

The lead sponsor of the bill in the House, Rep. Jim McDermott, D-Seattle., reminded lawmakers that they'll have to revisit the issue again before adjourning for the year.

The bill applies to benefits exhausted this year, and "Congress must act again before the end of this year to continue the extended unemployment benefits that we are now improving." The cost for benefits extension is $2.4 billion, to be paid for by extending an unemployment-insurance payroll tax that employers must pay.

Information from

Bloomberg News

is included in this report.