May 11, 2015

Trade Adjustment Assistance Reauthorization Act of 2015

Noteworthy

Background: On April 22, the Senate Finance Committee approved 17-9 legislation to reauthorize the Trade Adjustment Assistance program. On April 23, the House Ways and Means Committee reported H.R. 1892, the Trade Adjustment Assistance Reauthorization Act of 2015. Reauthorization of TAA is expected to be attached to Trade Promotion Authority legislation. 

Floor Situation: On May 7, Leader McConnell filed cloture on the motion to proceed to H.R. 1314, the House-passed revenue bill that will carry trade legislation, setting up a cloture vote on May 12. The Senate Finance Committee released the Trade Adjustment Assistance Reauthorization Act of 2015 on May 8. It is anticipated that this bill will be introduced on May 11, readying it for consideration as part of broader trade promotion legislation.      

Executive Summary: TAA, a program administered by the U.S. Department of Labor, provides assistance to domestic workers affected by international trade. The bill reauthorizes the TAA for Workers, TAA for Firms, and TAA for Farmers programs through June 30, 2021. 

Key components of the TAA for Workers program include: Trade Readjustment Assistance, a weekly payment to a worker who has exhausted his or her unemployment insurance benefits and enrolled in an eligible training program; occupational training; Alternative Trade Adjustment Assistance, which provides a wage subsidy to eligible workers over the age of 50 to subsidize a portion of the wage difference between new wage and their old wage; and job search assistance and relocation allowances. Previous reauthorizations of TAA have been done with congressional action on international trade. The bill also authorizes appropriations for TAA for Farmers and TAA for Firms through 2021. Additionally, the bill would extend the Health Coverage Tax Credit through 2019 and would extend authority to collect and increase the rate of certain customs user fees. It also makes changes to the Medicare program.

Overview of the Issue

Trade Adjustment Assistance for Workers provides federal assistance to dislocated workers who have been adversely affected by international trade. Its primary benefits are funding for retraining and income support payments while affected workers retrain.

To qualify, a group of workers (or their union, firm, or state) must apply to DOL to establish that international competition “contributed importantly” to their job loss. Once DOL certifies the petition, individual workers covered by that petition may receive benefits through state workforce systems and state unemployment insurance agencies. Benefits are funded by the federal government and administered by state workforce systems. In fiscal year 2015, appropriations for TAA were $711 million. Appropriations cover estimated program costs. Actual costs vary each year depending on usage.

TAA benefits and services include:

  1. Training (funding capped at $450 million/year);
  2. employment services through state workforce agencies, including case management, career counseling, job search assistance, and other non-training services;
  3. job search and relocation assistance;
  4. trade readjustment assistance, an income support for certified workers who have exhausted their unemployment insurance benefits and are enrolled in an eligible training program; and
  5. wage insurance benefits for certified workers age 50 and older who obtain reemployment at a lower wage. The wage insurance program provides a cash payment equal to 50 percent of the difference between the worker’s new wage and previous wage, up to a two-year maximum of $10,000.

Congress last reauthorized TAA under the Trade Adjustment Assistance Extension Act of 2011. This reauthorization was aligned with the passage of 2011 free trade agreements with Colombia, South Korea, and Panama. The expanded provisions of TAAEA expired after December 31, 2013, and the eligibility criteria and benefit levels were to shift to the more restrictive provisions that were in place prior to 2009. DOL refers to these provisions as “Reversion 2014.” The TAA program is currently operating under the Reversion 2014 provisions for new beneficiaries. 

These provisions were set to remain in place for one year until the program was to begin to be phased out after December 31, 2014. However, the Consolidated and Further Continuing Appropriations Act of 2015 appropriated funds for the program for fiscal year 2015.

Considerations on the Bill

The Senate Finance Committee marked up legislation on April 22, 2015. The vote on the TAA bill was 17-9 with Senators Burr, Portman, Toomey, Coats, and Heller supporting. On April 23, the House Ways and Means Committee reported H.R. 1892, the Trade Adjustment Assistance Reauthorization Act of 2015.

Notable Bill Provisions

Section 2 – Application of provisions relating to Trade Adjustment Assistance

Repeals sunset provisions in the Trade Adjustment Assistance Extension Act of 2011, and reinstates law in effect as of December 31, 2013, subject to changes made in this act. Benefits are effective on date of enactment. 

Section 3 – Extension of Trade Adjustment Assistance program 

Modifies the authorization termination date for TAA for Workers, TAA for Firms, TAA for Farmers, and the Reemployment TAA programs from December 31, 2013 to June 30, 2021. 

Caps total annual funding for training, employment and case management services, job search allowances, and relocation allowances at $450 million for fiscal years 2015 through 2021, reduced from 2009 (more than $600 million) and 2011 ($575 million). 

Reinstates the amendments from the TAA Extension Act of 2011:  no more than 10 percent of the amount provided may be spent for administration; no less than five percent of the amount provided may be spent for case management and employment services; and DOL may recapture funds from states remaining unobligated after two or three years and distribute such funds to states in need of funds. In addition, the modification eliminates individual entitlement to job search and relocation allowances, giving states the discretion to offer such allowance based on the availability of funding.  

Extends the termination date for the Reemployment Trade Adjustment Assistance from December 31, 2013, to June 30, 2021. 

Section 4 – Performance measurement and reporting

Amends data collection and reporting requirements of TAA to align with the performance accountability measures and reporting requirements under similar federally funded job training programs, such as those implemented last year under the Workforce Innovation and Opportunity Act. Requires states and cooperating state agencies as well as the secretary of labor to prepare performance reports annually, and to be available in an easily understandable format including electronically. Includes a new definition for a recognized postsecondary credential, which includes industry-recognized certificates, also aligning with similar provisions in WIOA.

Section 5 – Applicability of Trade Adjustment Assistance provisions 

Establishes the applicable provisions of the TAA for Workers program to those who filed petitions on or after January 1, 2014, and prior to the date of enactment of this bill. Workers who were denied benefits shall be reconsidered, and pending applications shall be considered in accordance with this bill. Narrows the eligibility window for certified workers to 90 days after the date of the enactment of this bill. 

Also provides similar eligibility determination and reconsideration rules for firms under the TAA for Firms program. 

Section 6 – Sunset provisions

Beginning July 1, 2021, the law that was in effect under the TAA for Workers, Alternative TAA, TAA for Firms, and TAA for Farmers programs will shift the programs back to the levels in effect on January 1, 2014. This section makes changes to waivers for training requirements and limitations on Trade Readjustment Assistance. 

The TAA for Workers program in 2021 will retain the limitations on TRA, namely reducing the amount available to 117 weeks of benefits, including any pre-requisite or remedial education required, with the opportunity to receive up to an additional 13 weeks for completion of a degree or industry-recognized credential. The extra benefits are available only if the worker has substantially met the performance benchmarks established as part of the training program, is expected to continue to make progress toward completion of that training program, and will complete that training program within that additional time period. 

While beneficiaries certified for benefits prior to July 1, 2021, will continue to receive benefits to the extent funds are available and the recipient is eligible to receive benefits, the authorization for TAA for Workers, Alternative TAA, TAA for Firms, and TAA for Farmers will terminate on June 30, 2022. 

The section also amends the authorization of appropriations for TAA for Workers and ATAA to end June 30, 2022. 

Section 7 – Extension and modification of the health care coverage tax credit

Extends the refundable health coverage tax credit through 2019 and retroactively to 2014. Under prior law, certain people could claim a HCTC equal to 72.5 percent of the cost of certain types of health coverage purchased prior to 2014. The credit generally was available to people who received certain unemployment assistance due to trade-related events (i.e., through TAA), as well as people over age 55 who received pension benefits from the Pension Benefit Guaranty Corporation. The credit expired for coverage months beginning in 2014.

This section modifies the credit to prohibit people from claiming both the HCTC and certain other premium subsidies for the same coverage period, and to prevent use of the HCTC to purchase insurance through an Obamacare exchange.

Section 8 – Extension of customs user fees

Extends the current user fees collected by Customs and Border Protection through September 30, 2025. Under current law, user fees for various customs services expire on September 30, 2024. This section also extends the current rate for one custom fee, the merchandise processing fee, through September 30, 2025. JCT reports that this provision will increase offsetting receipts by $1.7 billion compared to a current law baseline.

Section 9 – Child tax credit not refundable for taxpayers using the foreign earned income exclusion

Under current law, qualifying taxpayers living abroad are eligible to exclude up to $100,800 (adjusted for inflation) of foreign earned income for U.S. tax purposes. Also under current law, the foreign earned income exclusion, once claimed, makes a taxpayer ineligible for the earned income tax credit. This is done so that a taxpayer with foreign earned income of $110,800 does not receive the EITC since they would appear to only have $10,000 in earned income subject to U.S. tax. This section would apply the same rules to the refundable portion of the child tax credit so that taxpayers earning substantial income abroad do not get this benefit intended for low-income people. JCT reports that this provision will decrease outlays by $293 million compared to a current law baseline (refundable portions of tax benefits are scored as outlays).

Section 10 – Timing shift for payment of corporate estimated taxes

For corporations with assets greater than $1 billion, this section increases by 2.75 percent the quarterly tax payment due in the last quarter of fiscal year 2020. In the first quarter of fiscal year 2021, this increase will be reduced by the additional amount paid previously. JCT reports that this provision will increase revenue by $2 billion in fiscal year 2020 and decrease revenue by $2 billion in fiscal year 2021, compared to a current law baseline

Section 11 – Coverage and payment for renal dialysis services for acute kidney injury

Under current law, freestanding dialysis facilities – including facilities owned by a hospital – may treat patients with end-stage renal disease, but not people with acute kidney injury. Those free-standing facilities are paid an average of about $240 per dialysis treatment. Medicare beneficiaries with acute kidney injury may receive dialysis services from hospital outpatient departments (which are distinct from hospital-owned dialysis facilities). Medicare pays those facilities about $600 per treatment.

This provision would allow freestanding facilities to treat beneficiaries with acute kidney injury and receive the rate for freestanding facilities. This proposal is also contained in the president’s fiscal year 2016 budget. CBO estimates that this provision will save about $250 million over the 2015-2025 period.

Section 12 – Modification of Medicare sequester in fiscal year 2024

Under current law, the Medicare sequester is scheduled to be zero percent for the last six months of fiscal year 2024. This section would make the Medicare sequester for this period 0.25 percent. CBO reports that this provision will decrease outlays by $700 million compared to a current law baseline.

Administration Position

The Administration has not stated its position on this bill. 

Cost

The Congressional Budget Office and JCT estimate that the bill would reduce deficits by $88 million over the 2015-2025 budget window.

Amendments

An amendment to strike this bill is expected.