The American Recovery and Reinvestment Act: The Role of Workforce Programs

6 Trade Adjustment Assistance Program

151 6 Trade Adjustment Assistance Program Stephen A. Wandner Urban Institute The Trade Adjustment Assistance (TAA) program is a form of extended unemployment insurance (UI) that targets workers adversely affected by international trade. Fifty years ago, the TAA program was created as part of the Trade Expansion Act of 1962 to help workers and firms adjust to efforts to promote freer international trade. The TAA program stemmed from the understanding that, as trade expands, there are winners and losers, and as a policy determination, the losers should be compensated, at least in part, for the costs they experience. The program has been a continuing tool to facilitate compromise on international trade policy by lessening the impact on adversely affected workers. Since the Trade Act of 1974, TAA has provided a variety of benefits and employment services to American workers who lose their jobs because of foreign competition or imports. The primary services for workers are these three: 1) monthly cash benefits similar to, and coordinated with, unemployment insurance; 2) access to employment and training services; and 3) other services and benefits including job search assistance, relocation assistance, and a tax credit to cover the costs of health insurance. Over the years, Congress has modified TAA many times, often in response to changing economic conditions and public policy concerns. During the time period covered by this study, three sets of TAA rules were in effect at various times during frequent and complex changes to the TAA system. 1) The Trade Act of 2002, Division A, Trade Adjustment Assistance , which may be cited as the Trade Adjustment Assistance ReformAct (TAARA) of 2002, reauthorized TAAfor five years as part of legislation extending the president’s expired “fast 152 Wandner track” authority to negotiate trade agreements. It expanded TAA in a number of ways, including making secondary or downstream workers eligible for the first time, creating a new health insurance tax credit program for dislocated workers, adding a program for farmers and authorizing a limited wage subsidy program for older workers. TAARA expired on September 30, 2007. However, the TAA program was kept afloat until February 2009 by a number or short-term bills, including the Trade Extension Act of 2007, the Consolidated Appropriations Act of 2008, and the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009. 2) The American Recovery and Reinvestment Act (ARRA) was enacted on February 17, 2009. It contained many provisions, including the Trade and Globalization Adjustment Assistance Act (TGAAA) of 2009, which extended TAA for nearly two years to the end of 2010. Changes effective in May 2009 included the following: additional funding for all programs, first-time eligibility for both service workers and firms, addition of a new communities program, and an increase in the amount of the tax credit for health insurance programs for dislocated workers. The ARRA/TGAAA expired at the end of December 2010. The AARA/TGAAA was extended through February 12, 2011, but the TAA program was reauthorized under the Omnibus Trade Act of 2010 to February 12, 2012. Under the Omnibus Trade Act, the TAA program reverted back to the preARRA Trade Act of 2002. The Trade Act of 2002 provisions were then in effect again beginning on February 12, 2011, until they were superseded by provisions in the Trade Adjustment Assistance Extension Act (TAAEA) of 2011 that October. 3) Trade Adjustment Assistance Extension Act (TAAEA) of 2011 was enacted on October 21, 2011. It reflected a compromise between the provisions of the Trade Act of 2002 and the Recovery Act of 2009. This TAA program reauthorization was a condition for the simultaneous enactment of three free trade agreements with Colombia, Panama, and South Korea. It continued the worker, employer, and farmer programs from the Trade Adjustment Assistance Program 153 Trade Act of 2002 but eliminated the communities program from the Recovery Act of 2009. It also retained many of the enhanced ARRA programs and higher funding levels. While it renewed eligibility for service workers and firms, increased job training income support, and retained health insurance tax credits, it also reduced funding for job search assistance, relocation assistance, and wage supplements for older workers. Box 6.1 summarizes when the various acts were in effect and whether study site visits were conducted during these time periods. This chapter considers the TAA program during the period of ARRA/TGAAA implementation and operation between May 2009 and February 2011. It also...