Aide: House Ways & Means Committee Chairman Signs Off on FTA/TAA Policy; Legislative Process Still a Problem

A House Ways and Means Committee aide says Chairman Dave Camp has signed off on the substance of a Trade Adjustment Assistance expansion in exchange for the Obama Administration's approval of free trade agreements with Colombia, South Korea and Panama.

However, the aide says House Republicans still oppose combining TAA with the trade agreements; a legislative strategy Senate Finance Committee Chairman Max Baucus announced Tuesday afternoon. Republicans have indicated they will not support the free trade agreements unless they are voted on independently of the TAA expansion.

Tuesday afternoon, Brendan Buck, a spokesman for House Speaker John Boehner wrote that Were pleased the President may finally send us the three job-creating trade agreements weve requested.  But we have long said that TAA even this scaled-back version should be dealt with separately from the trade agreements, and that is how we expect to proceed.

The committee aide has passed along details of the agreement that Republicans are characterizing as the White House's acceptance of "significant cuts and concessions on Trade Adjustment Assistance":

White House Holds Hostage Job Creating Trade Agreements in Exchange for TAA:

" The International Trade Commission estimates that the long-pending trade agreements with Colombia, Panama and South Korea would increase American exports by $13 billion meaning 250,000 new jobs in the United States.

" After years of delay on these trade agreements, summer 2011 marks a critical time for U.S. action that is when our foreign competitors will enter into their own agreements with these countries, putting at risk market share for U.S. farmers, businesses, and workers.

" In June, the Obama Administration made a surprise announcement that it would not submit the three long-pending, job-creating trade agreements to Congress unless Congress essentially reauthorized the 2009 TAA law for five years.

" Senate Finance Committee Chairman Max Baucus (D-MT) has decided to go forward with a nonmarkup of a combined South Korea/TAA implementing bill in the Finance Committee. Speaker Boehner has reiterated that TAA and the three trade agreements should be considered separately.

Republicans Reject 2009 Levels for TAA, Force Spending and Program Cuts:

" In 2009, TAA was expanded over the bipartisan 2002 levels.

" Led by Ways and Means Committee Chairman Dave Camp, House Republican negotiators refused to accept an extension of the 2009 TAA law.

" Instead, House Republicans exacted key spending cuts, consolidations, and other concessions on TAA and have significantly streamlined the program, in some cases below the stricter 2002 levels.

Those details of the program cuts are listed below.

" Additionally, Democrats were forced to pay for continuing this scaled-back TAA program with other spending cuts including cuts to other unemployment benefit programs.

TAA - Reforms, Cuts, and Programs Eliminated:

" Reduces the number of weeks of income support from 156 in the 2009 law down to 117 weeks, with up to an additional 13 weeks available only if an applicant can show a need for additional training and demonstrate during training that the applicant has substantially met the performance benchmarks of the training program. This curtailed and restructured program places greater restrictions on the last 13 weeks of benefits than existed under the 2002 law.

" Slashes the health coverage tax credit (HCTC) to 72.5% from the 2009 laws 80% level and eliminates it completely after 2013.

" Eliminates half of the allowable justifications for waivers from the programs training requirements, which accounted for more than 85 percent of the roughly 90,000 waivers granted in FY2010. This will reduce the number of beneficiaries and program costs below 2002 levels, because these beneficiaries must begin their training 26 weeks earlier or not be eligible for the programs income support.

" Denies eligibility to public sector workers that had been granted under the 2009 program.

" Consolidates and reduces (by $110 million) all non-income support expenditures of the program (training, case management, administrative expenses, and relocation/job search expenses) under a single cap to manage at State discretion.

" Eliminates the entitlement to relocation and job search expenses from the 2009 law and reduces the maximum benefit to 2002 levels. Moreover, these expenses will be covered only if States have the funds available under the consolidated expenditure cap.

" Reduces wage insurance program to 2002 levels by requiring a lower income level for eligibility and reducing the level of benefits.

" Slashes TAA for Firms program to 2002 levels ($16 million) from $50 million under the 2009 program.

" Removes mandatory nature of the TAA for Farmers program in the 2002 and 2009 laws by making the program discretionary.

" Eliminates both the TAA for Communities and the Industry/Sector Partnership grant sub-programs ($190 million authorization in 2009 bill).

" Adds new performance measures and accountability requirements for all programs.


" Eliminates the HCTC entirely after 2013.

" Reverts TAA to 2002 levels or below for 2014 (necessary for CBO scoring purposes), repealed after 2014.

No New Deficit Spending:

" Fully offsets all spending with spending cuts, including, reforms to Medicare and unemployment insurance. To put the cost in perspective, the Administration wanted to extend the 2009 law, which would have been scored by CBO as costing around $700 million per year. The current agreement will cost far less just over $900 million for roughly three years.

" The reforms to the Unemployment Insurance (UI) program improve program integrity by ensuring people who are rehired by the same company cant keep collecting UI and that those who previously defrauded the program are required to pay increased financial penalties.

" The reduction in Medicare costs stem from MedPACs recommendation on payments for imaging equipment (like an MRI or CAT scan). CMS had previously implemented this policy, but Democrats reversed it in their health care law.

" The bill also contains two tax compliance measures from the Administration's FY 2012 budget. One increases penalties on EITC return preparers that fail to satisfy certain requirements; the other ensures the IRS receives better information about prisoners to help prevent fraud in various tax credit programs. Even with these provisions, the TAA title is expected to score as a small net tax cut.