Sunday, February 1, 2004

Bush to revive jobless accounts

Plan scaled back from original

By Brian Tumulty
Gannett News Service

WASHINGTON - President Bush will resurrect his plan for personal re-employment accounts in the 2005 budget to be released Monday, according to a former administration official who was an architect of the proposal.

Last year's proposal to spend $3.6 billion nationwide for individual accounts of up to $3,000 is expected to be scaled back to allow for experimentation. Glenn Hubbard, former chairman of the White House Council of Economic Advisers, said Friday that the re-employment accounts would not replace unemployment insurance but be an additional tool to help those out of work.

The proposal would allow the unemployed to use their accounts for job training, transportation, child care and even moving expenses. Workers who find a job before spending the entire account would receive the remaining money as a cash bonus.

Use of the accounts would be voluntary, and they would be awarded only to workers whom local employment services office consider least likely to obtain employment quickly.

Hubbard emphasized that the current unemployment insurance system needs to be overhauled from its longtime emphasis on serving people who are temporarily laid off.

But Democrats who have criticized the administration for allowing unemployment insurance for the long-term jobless to lapse think the proposal may be used as political cover.

The administration stayed quiet late last year when congressional Democrats unsuccessfully pleaded with Republican leadership for a renewal to Federal Temporary Extended Unemployment Compensation.

The program, which provided up to 13 weeks of additional coverage for those out of work more than 26 weeks, expired at the end of December.

As a result, an estimated 375,000 people exhausted their unemployment benefits in January without finding a job, according to an estimate from the liberal Center on Budget and Policy Priorities.

Isaac Shapiro, author of the report, noted that the $6 billion cost of renewing extended unemployment benefits through the end of June could be paid out of the $20 billion in the federal unemployment insurance trust fund.

"I think they need to make sure unemployed workers have a safety net before they experiment," said Bill Samuel, legislative director of the AFL-CIO.

However, both supporters and critics of personal re-employment accounts agree that the basic problem that needs to be addressed is the permanent loss of jobs.

The manufacturing sector has lost jobs for 41 consecutive months, with employment down 2.8 million since July 2000. Advocates of training services say the priority should be to develop skills in high-growth industries.

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