Congress Extends Jobless Benefits, Home-Buyer Credit By Corey Boles The Wall Street Journal 11-05-2009

Congress Extends Jobless Benefits, Home-Buyer Credit
By Corey Boles
The Wall Street Journal
November 5, 2009

Congress approved an extension of federal jobless benefits, sending the long-delayed bill to President Barack Obama a day before the issuance of monthly unemployment data.

Mr. Obama is expected to sign into law on Friday the jobless-benefits measure, which would extend federal payments to the long-term unemployed by up to 20 weeks from the current maximum of 33 weeks in many areas of the country.

The House voted 403-12 to pass the bill after the Senate unanimously approved it Wednesday. The legislation would also extend and expand a home-buyers' tax credit and allow big businesses to claim a larger portion of the losses they have incurred in the recession against previously paid taxes.

The bill's centerpiece is an extension of federal jobless benefits by 14 weeks for unemployed Americans in all 50 states, and by 20 weeks in states with jobless rates averaging at least 8.5% in the previous three months. The national unemployment rate hit a 26-year high of 9.8% in September, and economists expect the Labor Department to report a further rise for October in its Friday report.

The House vote came more than a month after it adopted a more-modest extension of unemployment benefits. The Senate added the home-buyers' tax credit extension and business refunds.

To pay for the additional jobless benefits, Congress is seeking to extend a payroll tax on employers that had been set to expire at the end of the year. The corporate tax breaks would be paid for by postponing the implementation of a 2004 tax cut for U.S. multinationals aimed at making them more competitive with foreign rivals.

In the Senate, disputes over several politically charged amendments held up the legislation for almost five weeks.

An extension in unemployment benefits would mean that jobless people living in the hardest-hit states could be receiving payments for up to 99 weeks. It would apply only to those long-term unemployed who exhaust their federal benefits before the end of the current year.

If the high unemployment rate continues, lawmakers are likely to consider offering further federal assistance.

The bill would extend an $8,000, first-time home buyers' tax credit on all house contracts entered into before April 30, 2010, and closed by June 30 the same year. It would create a new, $6,500 credit for existing property owners who sell their home and buy another during the same period of time. Both credits would have income restrictions limiting their availability.

Businesses would be able to write off losses they booked in 2008 or expect to book in 2009 against federal income taxes paid on profits earned over the previous five years. The economic-stimulus plan enacted in February had created the tax credit, but restricted it to smaller firms.

The measure would also allow smaller investors who lost money in the Bernard Madoff scandal to claim a portion of their losses against taxes paid in earlier years.