June 17, 2008
Statement

Floor Statement on Extending Unemployment Insurance Benefits

MR REED:  Mr. President, I rise today to talk about the importance of extending unemployment insurance benefits to workers whose regular benefits ran out before they could get a new job.

As we know, the labor market is weak. The unemployment rate has jumped to 5.5 percent in April from 5 percent in March. That is an extraordinary jump. This is the largest single month spike in 22 years and the highest level in 3.5 years.

In addition, the Labor Department's alternative unemployment rate, a measure that includes people who want to work but who are discouraged from actively seeking employment because they cannot find full-time jobs, reached 9.7 percent in May. This latter statistic might be more accurate with what has actually happened in neighborhoods across America.

For Rhode Islanders, the situation is among the worst in the Nation. The number of unemployed Rhode Islanders has risen to approximately 35,000, which has been trending upward and is the highest since June 1994. Indeed, 6.1 percent are jobless right now, a figure which has remained unchanged over the past 2 months.

This is the fourth highest unemployment rate in the United States, and the highest rate in Rhode Island since August 1995, more than 12 years ago. It is also critical to point out that almost half, 41 percent of Rhode Islanders unemployed in January, February and March, exhausted their benefits, which is more than any other State in New England. Unfortunately, other economic indicators are equally discouraging. Economists think inflation is here to stay, and it is likely to get worse. We have received a very poor inflation number this morning which suggests that the forecasts of economists are sadly becoming true.

Food prices are high. Consumers are able to afford fewer groceries at the supermarket and restaurants are being squeezed by food costs. Food prices across the country spiked by more than 4 percent in 2007, the biggest jump in 17 years, and they are expected to escalate another 6 percent this year, though some items, including eggs and milk, have gone up much more. So we are not talking about luxury items, we are talking about the basics to survive. They are getting more and more expensive as more and more people are not able to find adequate work.

The price of gasoline has risen 35 percent from a year ago, when it averaged approximately $3. In Rhode Island, it now costs $4.11, on average, for a gallon of regular unleaded, making it very difficult for working families simply to get to school, to get to their job, and to get around the State.

The gross domestic product, the Nation's total output of goods and services, the measure of the overall economic activity of the country, increased at a mere .9 percent in the first quarter of 2008, which is nearly the same as the fourth quarter of last year. This stagnant growth obviously is highly correlated with the rising unemployment.In April, consumer credit borrowing rose $8.9 billion for the month to $2.56 trillion. This is significantly higher than economists forecast. This means increasingly that Americans are going to their credit cards to get by, and this is a timebomb ready to explode in our economy.

More American families are being overwhelmed by debt. More and more families are forced, because they do not have adequate jobs, adequate wages to face the rising cost of gasoline and food, to take out the plastic. That can only last a certain amount of time. This is a looming problem that we have to recognize.

Similarly, there is speculation that the impact of the foreclosure crisis will continue to spread. In my home State of Rhode Island, we have the highest foreclosure rate in New England. And the outlook is just as bleak. A recent Credit Suisse report noted that foreclosures could impact about 6.5 million loans by 2012, meaning that nearly 13 percent of residential borrowers could be put out of their homes; 13 percent of homeowners in America are facing the prospect within the next few years of losing their homes. That is a startling and unacceptable projection.

Given that the economic situation is significantly harsher now than the start of the last recession, the need to extend unemployment benefits is clear. In doing so, we can start to stimulate the economy. We have virtually no growth, we have a foreclosure crisis with escalating gasoline and food prices. If we want to get this country moving again, we have got to stimulate the economy. We tried with the rebates a few months ago; that has not proved effective. Unemployment insurance benefits have a very high return on their investment. It generates approximately $1.64 in gross domestic product for every dollar we put in, and that makes sense.

Individuals receiving these benefits are going to go right to the store, they are going to fuel their cars, they are going to buy food, they are going to try to take care of their children. This money is going right back in the economy. It is going to stimulate 64 cents more than we invest.

I am disappointed that the administration has released a Statement of Administration Policy stating that it strongly opposes the bipartisan measure overwhelmingly passed by the House of Representatives last week.

I am disappointed that the minority is unwilling to enact this meaningful legislation before us today. This would make a positive difference for America. I think it is reckless and irresponsible. Unfortunately, it is characteristic of this administration that they would oppose unemployment benefits for Americans while they continue to exhort us to spend billions of dollars in Iraq and Afghanistan. The contrast could not be more stark and, I think, more condemning of this administration.

I believe we have to pass this legislation. We have to face it. And for my constituents in Rhode Island, it would be extremely useful.

According to the Center for Budget Policy Priorities, we have done this, we have extended benefits seven times over the past half century. They have provided much needed relief to workers. This is not something novel and unique. This is something we have done and we should do. We cannot afford to delay extending these benefits any longer. People are struggling throughout this Nation. It is our responsibility to respond to their needs, to give them a chance, to keep them afloat in a very stormy economic sea.

I urge the immediate passage of these unemployment benefits.

I yield the floor.

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