Congress passes bill to shore up depleted programs

WASHINGTON — Congress on Thursday came to the rescue of three recession-hit programs, including aid for unemployment benefits, that face serious disruptions in services while lawmakers are on vacation in August.

Lawmakers, eyeing their departures from Washington, moved with unusual speed to approve the three-part package that adds $7 billion to the highway trust fund, replenishes the federal unemployment insurance trust fund and gives new lending authority to Federal Housing Administration programs that play a large role in providing low-interest housing loans.

All three are at risk of running short of money in August.

The Senate passed the measure 79-17 on Thursday, a day after it won overwhelming approval in the House. It now goes to President Barack Obama for his signature.

Senate supporters of the bill first had to defeat several Republican amendments that would have used unspent money from the $787 billion economic stimulus act to strengthen the highway and unemployment funds.

GOP senators argued that some of the stimulus money won’t be spent for a year or two and that the bill, which transfers money from the general treasury to the trust funds, adds to the federal deficit. There’s no set amount for the infusion into the unemployment insurance fund, but it was estimated that it would need about $7.5 billion to help state unemployment programs that are insolvent.

Sen. Barbara Boxer, D-Calif., said in opposition that the Republicans were “slashing funds from the stimulus program that has one purpose and that purpose is to create jobs.”

The unemployment fund is crucial to the 18 states that have depleted their unemployment compensation budgets and already have loan balances exceeding $12 billion. More states are expected to turn to the federal trust fund for loans as the recession lingers and the jobless rate approaches 10 percent.

Sen. Jack Reed, D-R.I., said that without the legislation his state — one of the 18 — “and many other states would look to a real crisis in which they would fail to be able to respond to this need for unemployment compensation.”

Rep. John Dingell, D-Mich., whose state unemployment fund has been insolvent for two years, said that without congressional action, “4.6 million people nationwide will not receive unemployment benefits in August and September.”

States generally offer 26 weeks in unemployment benefits, averaging around $300 a week. Congress, in the stimulus act and other legislation, has extended the time for receiving benefits and increased payments.

The bill also raises the ceiling for the FHA’s mortgage insurance program for this fiscal year from $315 billion to $400 billion. The securities guarantee authority for the Government National Mortgage Association — or Ginnie Mae — would increase from $300 billion to $400 billion.

The FHA became the main source of home loans to borrowers with poor credit and low down payments after the collapse of the subprime lending market.

Monthly volume has averaged almost $33 billion a month over the last three months, and with only $59 billion left in the fund for the fiscal year ending in September, it appears likely that the remaining authority will be exhausted in August.

The highway trust fund, made up of revenue from fuel taxes drivers pay at the pump, is the source for the approximately $40 billion the federal government spends every year on roads, bridges and transit projects.

The fund’s balances have steadily declined in recent years because people have been driving less during the recession and buying more fuel-efficient cars and because Congress has refused to raise the federal fuel tax — 18.4 cents a gallon or 24.3 cents for diesel — since 1993 despite inflation and soaring construction costs.

The fund is expected to drop into the red in late August. The immediate result would be that federal payments to states for highway and transit projects, now made on a daily basis, would be strung out and made once a week or twice monthly. The $7 billion would keep the fund solvent through Sept. 30, the end of this fiscal year.

The stopgap measure comes against a backdrop of a dispute over longer term solutions. The House Transportation Committee is pressing for quick action on a $500 billion bill to finance infrastructure projects over the next six years and restructure how the money is spent. The Senate, backed by the White House, prefers an 18-month extension of the current surface transportation bill, which expires at the end of September, to allow more time to determine how best to finance the nation’s massive infrastructure needs.

Transportation Secretary Ray LaHood told a House committee recently that the administration was still searching for solutions. “We’re not for just taking money from the general fund and just lopping it over into the highway fund. We think we should pay for it.”

The bill is H.R. 3357.

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