CRS Describes Health Coverage Tax Credit Under Trade Adjustment Assistance

Trade Adjustment Assistance (TAA) for Workers provides support to qualifying workers who have been adversely affected by foreign trade. The two largest components of the TAA program for workers are (1) training assistance for workers who have lost their jobs directly due to increased imports or shifts in production out of the United States, and (2) income support for these workers who have exhausted their unemployment compensation. Certified workers who cannot obtain employment in their local commuting area may also be eligible for job search and relocation allowances. Some workers aged 50 or older are eligible to participate in Alternative Trade Adjustment Assistance (ATAA), a wage supplement program. Both TAA -- and ATAA-eligible workers can receive a Health Coverage Tax Credit (HCTC), which provides a refundable tax credit to offset a portion of qualified health insurance premiums.

This report provides background on the TAA and ATAA programs, including eligibility criteria, available benefits, and program participation data. It also discusses the temporary changes made to TAA by the Trade and Globalization Adjustment Assistance Act (TGAAA), which was enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). This report concludes by discussing recent congressional action on the reauthorization of TAA and its relationship to pending free trade agreements.

                            Contents

This report provides background information on Trade Adjustment Assistance for workers (TAA).¹ TAA provides federal assistance to qualified workers who have been adversely affected by foreign trade. The report begins with a brief legislative history. It then explains how groups and individual workers establish eligibility for TAA, describes the types of benefits available, and outlines how the program is financed and administered. It then presents program participation and performance data from recent years. The report concludes with a discussion of ongoing program reauthorization issues.

TAA eligibility and benefits were temporarily expanded by the Trade and Globalization Adjustment Assistance Act of 2009 (TGAAA), part of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). The TGAAA expansions expired in February 2011 and TAA's provisions reverted to prior law, though workers that filed petitions during the TGAAA expansions remained eligible for the expanded provisions. Because many of the current recipients of TAA benefits are still receiving the expanded set of TGAAA benefits, this report discusses both the provisions available under TGAAA provisions and those available under current law.

Legislative History

TAA was formally established by the Trade Expansion Act of 1962 (P.L. 87-794) but was little used until the Trade Act of 1974 (P.L. 93-618) expanded benefits and eligibility.² The Trade Act of 2002 (P.L. 107-210) significantly amended P.L. 93-618, established Alternative Trade Adjustment Assistance (ATAA), and reauthorized and expanded TAA. Authorization expired on December 31, 2007, but the Consolidated Appropriations Act of 2008 (P.L. 110-161, signed into law on December 26, 2007) contained an appropriation for the TAA for Workers and ATAA programs that funded the programs for FY2008.³ The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (P.L. 110-329), funded the TAA and ATAA programs through March 6, 2009, and specified that the programs would continue through this date.

TGAAA reauthorized and temporarily expanded TAA. TGAAA was signed into law as part of the ARRA (P.L. 111-5) on February 17, 2009, and the expanded provisions became active 90 days later. Authorization for the changes made by TGAAA was set to expire on December 31, 2010, but the Omnibus Trade Act of 2010 (P.L. 111-344) extended the changes made by TGAAA though February 12, 2011. After that date, TAA reverted back to the provisions that existed prior to the TGAAA expansion. Workers covered by petitions that were filed during the TGAAA expansion remain eligible for most of the expanded benefits.⁴ Authorization for the TAA for workers program expires February 12, 2012.

Eligibility and Application Process

Obtaining TAA or ATAA benefits is a two-stage process. First, a group of workers must petition the Department of Labor (DOL) to establish that foreign trade contributed to their job losses and become TAA certified. Once the group has been certified, individual workers covered by the group's petition apply for TAA or ATAA benefits at a local One-Stop Career Center.

TAA Group Eligibility

To be eligible for TAA, a group of workers from a firm (or a subdivision of a firm) must have become or have been threatened with becoming totally or partially separated from their employment.⁵ Only firms that produce articles can be certified; service firms are not currently eligible for TAA.

The petitioning workers must establish that foreign trade contributed importantly to their separation.⁶ The contribution of foreign trade can be established in one of several ways:

• A shift in production. The workers' firm has shifted production to either (1) a country with which the United States has a free trade agreement, or (2) a country that is a beneficiary under the under the Andean Trade Preference Act (P.L. 102-182); the African Growth and Opportunity Act (P.L. 106-200); or the Caribbean Basin Economic Recovery Act (P.L. 98-67).

• An increase in competitive imports. The sales or production of the petitioning firm has decreased absolutely and imports of articles like or directly competitive with articles produced by the petitioning firm have increased.

• Adversely affected secondary workers. The petitioning firm is a supplier or a downstream producer to a TAA-certified firm and either (1) the sales or production for the TAA-certified firm accounted for at least 20% of the sales or production of the petitioning firm, or (2) a loss of business with a TAA-certified firm contributed importantly to the workers' job losses.

To gain TAA eligibility, a group of three or more workers (or their union, firm, or state) must complete a two-page petition and submit it, along with any supporting documentation, to DOL.

Petitions may be completed online or mailed. After receiving the petition, DOL investigates to determine if the petition meets any of the three criteria outlined above.

DOL is statutorily required to make a determination on a TAA petition within 40 days of filing.⁷ Determinations on TAA petitions are published in the Federal Register and on the DOL website.

If a petition is certified, DOL will also determine an impact date on which trade-related layoffs began or threatened to begin. This date can be as early as one year prior to the petition. A certified petition will cover all workers laid off between the impact date and two years after the certification of the petition. For example, if a petition was certified on June 1, 2010, and the impact date was found to be March 1, 2010, all members of the certified group laid off between March 1, 2010, and June 1, 2012, would be eligible for TAA.

If a petition is denied, the group who was denied certification may request administrative reconsideration by DOL. Reconsideration requests must be mailed within 30 days of Federal

Register publication. Workers who are denied certification may seek judicial review of DOL's initial petition denial or denial following administrative reconsideration. Appeals for judicial review must be filed with U.S. Court of International Trade within 60 days of Federal Register publication of the initial denial or the administrative reconsideration denial.

TAA Individual Eligibility and Certification

If DOL certifies a petitioning group of workers as eligible, the individual workers then apply to their One-Stop Career Center to establish a TAA benefit claim. In addition to being covered under a certified petition, a worker must meet all of the following conditions: (1) separation from the firm on or after the impact date specified in the certification but within two years of DOL certification, (2) employment with the affected firm in at least 26 of the 52 weeks preceding layoff, (3) entitlement to state UI benefits, and (4) no disqualification for extended unemployment benefits. Additionally, to receive the Trade Readjustment Allowance (TRA) benefit, workers must also be enrolled in an approved training program or have received a waiver from training.⁸

Certified workers who are denied individual benefits can appeal the decision. The determination notice that certified workers receive after filing their applications for each benefit will explain their appeal rights and time limits for filing appeals.

ATAA Eligibility

ATAA is an alternative program for TAA-eligible workers age 50 and over. ATAA was created in 2002 as an alternative support program for older trade-affected workers who likely have limited time remaining in the labor force and for whom retraining may not be a cost-effective option. To participate in ATAA, certified workers must secure new full-time employment within 26 weeks of separation from their TAA-certified employment. To be eligible for ATAA wage supplements, workers' annual wages at their new jobs must be lower than their certified jobs and less than $50,000.

A petition for TAA group eligibility also functions as a petition for ATAA eligibility. If certified for both programs, workers have the option of applying for TAA or ATAA benefits.

Comparison of Eligibility Under Current Law and TGAAA Expansions

As noted above, the TGAAA amendments temporarily expanded TAA eligibility. Table 1 details the certification criteria under the current law and under the temporary TGAAA expansion. Because an approved petition remains valid for two years after its certification date, newly separated workers may become eligible under a certified petition that was approved during the expansion.

             Table 1. Trade Adjustment Assistance for Workers Group

TAA benefits, which focus on the financial support and reemployment of certified workers, have several components: training assistance, income support while in training, job search and relocation allowances, and a health coverage tax credit. All TAA appropriations are mandatory spending.

Training Assistance

Training assistance is a capped entitlement program that is funded by the federal government and administered through the states. Up to 104 weeks of training funding is available to fully separated certified workers who wish to pursue a program on a full-time basis and for whom no suitable employment is available. In order to receive funding, the worker must be qualified to undertake the requested training, the training must be available at a reasonable cost, and there must be a reasonable expectation of employment following the completion of training.⁹ The range of approved training includes a variety of governmental and private programs.¹⁰

Eligible workers request training assistance through their local One-Stop Career Centers. Once approved, training can be paid on the worker's behalf directly to the service provider or through a voucher system. There is no federal limit on the amount of training funding an individual can receive, though some states have a cap.

Due to the range of acceptable activities and decentralized nature of job training, a concise summation of TAA training programs is difficult. Data from DOL, however, offer some insight into the nature and duration of programs. In FY2010, approximately 90% of TAA training participants received what DOL defined as Occupational Skills Training. The remainder of training was classified as remedial, prerequisite, on-the-job, or other customized training. Among the 70% of participants that completed a program, the average duration of training was 428 days. Among the 30% of participants that did not complete a program, training averaged 335 days.¹¹

DOL does not require the states to track the type of institutions that provide training to TAA participants.¹² Some data on this topic, however, are available from a 2006 report from the Government Accountability Office (GAO). In this report, GAO closely examined five cases of plant closures where a number of workers were TAA-eligible. The study found that in three of the five cases, a majority or plurality of the TAA training participants enrolled in programs at public institutions such as community colleges or public vocational schools. The other two cases reported a majority of training participants enrolling in proprietary (i.e., for profit) institutions. No case reported more than 8% of its participants enrolling in on-the-job training and two cases reported no participants partaking in such programs. In all five cases, a substantial majority (between 64% and 100%) of training participants enrolled in a program with an anticipated cost of less than $10,000. GAO noted that while the five cases were geographically diverse and included urban and rural firms, their data were not necessarily representative of national trends.¹³

The $575 million obligated for training funding in FY2010 assisted 97,888 participants (average obligation of $5,874 per participant). Since training programs can span fiscal years, funds could be obligated for future years. Among the 25 states with at least 1,000 training participants in FY2010, per-trainee obligations ranged from $2,702 in North Carolina to $10,216 in Idaho.¹⁴

TAA does not require training programs to lead to a credential. Preliminary analysis of FY2009 participant-level data of TAA exiters obtained from DOL suggests that the majority of TAA participants that completed a training program did not earn a credential. Among the minority that did receive a credential, an occupational skills certificate was the most common.

Trade Readjustment Allowance

Trade Readjustment Allowance (TRA) is an uncapped entitlement that provides income support to certified workers who are in approved training and whose unemployment insurance (UI) benefits have been exhausted. It is funded by the federal government and administered by the states.

In FY2010, the average weekly TRA payment was $320. TRA benefit levels are equal to the worker's final UI benefit. UI benefit levels are based on earnings during a base period (typically, the first four of the last five completed calendar quarters). UI benefits typically replace 50% of a worker's income up to a statewide maximum. Since states each administer their own UI programs, there may be some variation in these calculations. In January 2011, the highest maximum weekly UI benefit for a worker with no dependents was $625 in Massachusetts and the lowest was $235 in Louisiana.¹⁵

There are two stages of TRA:

• Basic TRA.The weekly basic TRA payment begins the week after a worker's UI eligibility expires. To receive the basic TRA benefit, workers must be enrolled or participating in TAA-approved training, have completed such training, or have obtained a waiver from the training requirement. The total amount of basic TRA benefits available to a worker is equal to 52 times the weekly TRA benefit minus the total amount of UI benefits. For example, assuming a constant benefit level, a worker who received 39 weeks of UI benefits would be eligible for 13 weeks of basic TRA. Presently, Emergency Unemployment Compensation (EUC) and Extended Benefit (EB) programs offset the entirety of basic TRA.

• Additional TRA. After basic TRA has been exhausted, workers who are enrolled in a TAA-approved training program are eligible for an additional 52 weeks of income support for a total of 104 weeks. (Additional TRA is not available to workers who have obtained a training waiver.) Workers whose training programs require remedial or prerequisite education are eligible for an additional 26 weeks of TRA, increasing their total eligibility to 130 weeks.

• UI payments also offset additional TRA payments. The EUC and EB programs have increased UI eligibility for workers in some states to 99 weeks, meaning that it is possible that a TAA-eligible worker in an approved, non-remedial training program and collecting TRA for the maximum duration would only receive additional TRA for five weeks. The EUC and EB programs led to a reduction in the number of participants in and government outlays on TRA in FY2009 and FY2010.

• TAA participants may only collect additional TRA as long as they remain enrolled in a qualified training program. For example, if a certified worker's training program ends 26 weeks into the additional TRA program, that worker is no longer eligible for the income support.

Job search and relocation allowances are a capped entitlement that target workers who cannot obtain suitable employment within their commuting area. Certified workers can receive an

Allowance equal to 90% of their job search and relocation expenses, up to a maximum of $1,250 for each benefit.

• A Job Search Allowance is available to subsidize transportation and subsistence costs related to job search activities outside an eligible worker's local commuting area. Subsistence payments may not exceed 50% of the federal per diem rate and travel payments may not exceed the prevailing mileage rate authorized under federal travel regulations. Applications must be submitted before a job search begins and job search activities must be completed within 365 days of certification or final separation or within 182 days of the end of training, whichever is latest.

• A Relocation Allowance is available to workers who have secured permanent employment outside their local commuting area. The benefit covers 90% of the reasonable and necessary expenses of moving the workers, their families, and their household items. Relocating workers may also be eligible for a lump sum payment of up to three times their weekly wage, though the total relocation benefit may not exceed $1,250.

• Certified workers submit their applications and receive their relocation allowance prior to moving. Applications must be submitted before the relocation occurs and be made within 425 days of certification or layoff or within 182 days of the end of training, whichever is later. The relocation must occur within 182 days of filing the application for relocation assistance or within 182 days after the conclusion of training.

The HCTC is available to workers who are collecting TRA or UI in lieu of TRA. Workers enrolled in ATAA are also eligible. The HCTC covers 65% of the premium for qualified health insurance purchased by an eligible taxpayer (the individual taxpayer is responsible for the other 35%).¹⁶ It is refundable, so workers may claim the full credit even if they have little or no federal income tax liability. The credit may also be advanced, so taxpayers have the option of using the credit on a monthly basis when premiums are due rather than waiting until the end of the year. Individuals may receive the HCTC for one month longer than they are eligible for TRA. ATAA recipients that receive the HCTC are eligible for two years of credits.

Alternative Trade Adjustment Assistance

ATAA is an uncapped entitlement that provides a wage supplement for workers age 50 and over who choose to forego TAA benefits and instead pursue reemployment at a lower wage. The program pays workers who secure new employment within 26 weeks of separation half the difference between the old and new wage. The maximum benefit is $10,000 over a two-year period. Although workers are ineligible if their new annual wage is more than $50,000, their combined wages and ATAA payments can exceed $50,000 a year. For example, a worker who earned $58,000 at a previous job and earns $48,000 at a new job would be eligible for a benefit of $5,000 per year for two years.

ATAA participants are not eligible for TRA, training assistance, or job search and relocation allowances, but they are eligible for the HCTC.

Comparison of Benefits Under Current Law and TGAAA Expansions

As noted previously, TAA benefits were increased between May 2009 and February 2011.

Table 2 compares these expansions with the current law benefits available to new applicants. Workers that were certified during the program remain eligible for most of the expanded benefits.

           Table 2. Trade Adjustment Assistance for Workers Benefits

At the federal level, the TAA and ATAA programs are administered by the Office of Trade Adjustment Assistance within DOL. Claims for TRA by individual workers are administered by state UI offices.

Funding is provided to the states to carry out TAA-related training activities. The funding level for each state is determined by a formula that considers (1) the trend of certified workers in the state during the past four quarters, (2) the trend of workers participating in training during the previous four quarters, (3) the number of workers estimated to be participating in training during the fiscal year, and (4) the amount of funding estimated to be necessary to provide approved training.¹⁷ In addition to training funds, states also receive funding for administration of the program equal to 15% of their training allotment.

The HCTC is administered by the Internal Revenue Service (IRS).

Financing and Funding levels

TAA is a mandatory program and DOL receives a single appropriation that it allocates to the program's components. Funds are then obligated to the appropriate cooperating state agencies (CSAs).

• Training is a capped entitlement and annual funding levels are determined by statute. Under current law, the annual training cap is $220 million plus an additional 15% for administrative expenses. During FY2010, when part of the year was under the TGAAA expansion program before reverting to previous law, training allocations were prorated. Obligated funds can be expended in the current or either of the two succeeding fiscal years.¹⁸

• Funds for job search and relocation allowances are allocated as part of TAA training line item. The funding levels for job search and relocation allowances are a combined $6 million under current law. Any unused funds are distributed to the states at the end of the year using the training formula.

• TRA and ATAA are uncapped entitlements. Annual allocations for these programs are based on congressional estimates. Any funds from these allocations that are unobligated at the end of the fiscal year expire.

• The HCTC is administered through the tax system and funded out of general revenue. It is not part of the appropriations process.

Data on TAA participation and benefit usage is tracked by CSAs that implement the program. Prior to FY2010, CSAs produced three separate reports with TAA data. In the first quarter of FY2010, CSAs transitioned to producing a single Trade Adjustment Assistance Trade Activity Participant Report (TAPR) with data from all TAA programs. This streamlined approach was intended to improve data quality while minimizing reporting burden.

Applications and Certification Activity

Table 3 includes data on TAA petitions and certifications from FY2003 to FY2010. The sharp increase of petitions filed in 2009 coincided with the expanded eligibility and benefits under the TGAAA program that began on May 19. Between May and July of 2009, more than 2,000 TAA petitions were filed. This represented a nearly fourfold increase from the 535 applications that were filed during the same three-month period in 2008.¹⁹

This surge of applications created a backlog at the investigation and certification level. In April 2009, the last full month before the TGAAA expansion, there were fewer than 200 pending TAA petitions. By May, the number of pending applications had increased to more than 800 and by August more than 1,600 petitions were awaiting a decision. Due to this backlog, many petitions filed in FY2009 were not determined until FY2010. A combination of backlog reduction initiatives from DOL and a decline in applications reduced the number of pending applications to less than 300 by September 2010.²⁰

DOL did not explicitly report the proportion of certifications during the TGAAA expansion that were due to expanded eligibility. Its 2010 annual report, however, noted that about 950 certifications in FY2010 were related to a shift in services or other service-related criteria. Such certifications would not have been possible under the pre-expansion criteria. DOL also noted that while the TGAAA expansion made public sector groups eligible for TAA under certain circumstances, no public agency had been certified.

              Table 3. Petitions and Certifications, FY2003-FY2010

As Table 4 shows, TRA participation in FY2009 and FY2010 was lower than in previous years. As noted above, TRA benefits are offset by UI benefits and DOL has indicated that the EB and EUC programs greatly reduced the number of otherwise eligible workers who would have collected TRA. The EB and EUC programs also led some workers who did receive TRA to collect it for a shorter period than they would have in the absence of the extension programs.

Collectively, these factors led to relatively small financial outlays on TRA in FY2009 and FY2010. Of the $1.1 billion that was allocated for TRA in FY2010, only $93 million was spent on the program. By contrast, in FY2007 and FY2008 when EB and EUC were not widely available, TRA outlays were more than $500 million.

         Table 4. Trade Readjustment Allowance Participation and Costs,

Table 5 offers recent data for training enrollment as well as program costs. DOL requires states to track the number of new and exiting training participants but data on the total number of training participants in a given year are not available.

As noted above, training funds are distributed to the states using a formula that considers past program usage and anticipated training costs. Table 6 shows the 10 states with the largest training allocations in FY2010. Collectively, these states accounted for 54% of TAA's training funding and 58% of its new training participants.

In addition to those that took part in training, 89,964 TAA-certified workers were granted training waivers during the FY2010. These waivers allowed the workers to be eligible for basic TRA without fulfilling the training requirement. About 88% of the waivers were due to a worker already having marketable skills or enrollment in training being unavailable.

         Table 5. Training and Benefit Data for TAA-Certified Workers,

With 723 combined participants in FY2010, job search and relocation allowances were the least used TAA benefit. Beneficiaries of these programs accounted for less than 1% of all TAA participants. According to the FY2010 TAA annual report, $6 million was allocated to job search and relocation benefits and, at the end of the year, $5,854,426 remained. These remaining funds were then distributed to the states using the original formula for allocating training funds. Table 5 shows that usage of these programs has been consistently low in recent years.

Research has shown that the low usage rate of these programs was only partially due to limited awareness of them on the part of TAA participants. A 2010 study conducted for DOL by Mathematica Policy Research (MPR) conducted surveys of TAA-eligible workers in 2007 and 2008. The study found that 53% of TAA participants were aware of the relocation allowances and 54% were aware of job search allowances.²¹

Health Coverage Tax Credit

Precise estimates on the participation rates in the HCTC program are difficult to develop. TAA certified and ATAA-certified workers are only a subset of the HCTC-eligible population and some TAA participants may not qualify for the HCTC. (For example, a TAA-eligible individual that is eligible for Medicare or Medicaid cannot claim the HCTC.) Furthermore, since the program is implemented through the tax code, DOL is not able to track usage directly.

A 2010 report from GAO analyzed a combination of DOL and IRS data to develop estimates of HCTC program data. While the report did not provide single-year costs, it estimated that the total governmental cost of the HCTC between 2003 and 2010 was approximately $676 million (an average of $84.5 million per year). GAO estimated that about $161 million (24%) of the HCTC's governmental costs went to administration. These data considered all recipients of the HCTC, not just those covered under TAA.

The GAO report also estimated participation rates among potentially eligible populations before and after the TGAAA expansions. It found that in the six months before TGAAA, about 6,000 out of approximately 100,000 potentially eligible TAA participants used the HCTC. In the six months after the expansion, an estimated 10,000 out of approximately 150,000 potentially eligible participants claimed the credit.²²

The aforementioned MPR study also collected data on knowledge of and participation in the HCTC program. Knowledge of the program was moderate, with about 58% of TAA participants being aware of the program. Among participants with knowledge of the program, about 28% applied for the HCTC. The most common reasons for not applying for the HCTC were the worker's share of the premium being too expensive (36% of nonapplicants) and already having coverage through a spouse's employer (21% of nonapplicants).

Alternative Trade Adjustment Assistance

In FY2010, $27 million was paid to more than 6,300 participants in the ATAA wage supplement program. In Table 7, the participant count includes those that received ATAA benefits as well as those that received the similar RTAA benefits during the TGAAA expansion. Participation in ATAA fell during the TGAAA expansion and it is unclear what effect, if any, other changes in TAA policies had on this trend.

    Table 7. Alternative Trade Adjustment Assistance, FY2003-FY2010

Table 8 offers data on post-TAA outcomes for program exiters using DOL's Common Measures, a metric that exists across its workforce programs. In the table, entered employment rate (EER) refers to the percentage of workers who were employed in the quarter after program exit. The employment retention rate (ERR) is the share of these employed workers who were also employed in the second and third quarter after exit. Average earnings (AE) were recorded in the second and third quarters after exit among workers who were employed in the first quarter after exit.

Neither of the groups in the table above include any recipients of the expanded TGAAA benefits because there was not enough time in the reference period for beneficiaries to enroll in TAA, receive services, exit the program, and then report employment outcomes.

              Table 8. Employment Outcomes for TAA and WIA Exiters

The TGAAA expansions expired on February 12, 2011. Since then, the program has operated under the provisions that were in effect prior to the expansions. Workers certified under the TGAAA provisions continue to be eligible for the TGAAA benefits, except for the increased HCTC levels, which expired for all workers along with the TGAAA expansions.

Authorization for TAA will expire on February 12, 2012. Reauthorization has been actively discussed by the 112^th Congress. Debate has primarily revolved around the reauthorization of TAA in the context of pending free trade agreements (FTAs) with South Korea, Panama, and Colombia.

In June 2011, the Senate Finance Committee issued a mock markup of the FTA with South Korea that included a reauthorization of TAA. Program eligibility, training benefits, and TRA duration provisions were close to the TGAAA levels, with some minor reductions and administrative changes. The proposal left job search and relocation allowances as well as ATAA at their current law levels and proposed an HCTC benefit level between TGAAA and current law. In a statement about the mock markup, the Finance Committee Chairman highlighted a commitment to restoring expanded eligibility provisions, noting that including service workers and those displaced by shifts in production to non-FTA countries was needed "to keep pace with changes in the global economy."²³

There has been debate about the approach undertaken in the mock markup. Some have voiced opposition, stating that the FTAs should be stand-alone legislation and not include any spending initiatives. Others have questioned the necessity of TAA, noting that there are other employment training programs and that the efficacy of TAA is unproven.

Supporters of the approach proposed in the mock markup see it as a means of reducing the negative effects that accompany the benefits of reduced trade barriers. They assert that in an era of high unemployment and modest job growth, TAA benefits should be at TGAAA levels to most effectively help workers displaced by trade.

In August 2011, Senate leaders announced an agreement to consider TAA reauthorization separate from the FTAs.²⁴ Supporters of TAA, however, claimed that they would not consider voting on the FTAs until TAA had been extended. The White House, which has not yet released the legislatively fast-tracked FTAs for a congressional vote, echoed this sentiment.²⁵

In September 2011, the House passed H.R. 2832, extending the Generalized System of Preferences, a set of provisions governing trade with developing nations, through July 2013. This bill may be used as the vehicle for the Senate to consider TAA reauthorization.²⁶

Author Contact Information

This report expands on and replaces RS22718, Trade Adjustment Assistance for Workers (TAA) and Alternative Trade Adjustment Assistance (ATAA) by John J. Topoleski. Dr. Topoleski assisted in developing this report.

² For more background and a detailed discussion of the legislative history of TAA, see CRS Report R41922, Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy, by J. F. Hornbeck and Laine Elise Rover.

³ For more information, see CRS Report RL34383, Trade Adjustment Assistance (TAA) for Workers: Current Issues and Legislation, by John J. Topoleski.

⁴ The TGAAA expansions ended on Saturday, February 12, 2011. However, applications received as late as 11:59 p.m. on Monday, February 14, were considered to be filed under the TGAAA expansions.

⁵ Partial separation is defined as hours of work being reduced to less than 80% of the worker's weekly average and wages being reduced to less than 80% of the worker's weekly average. See 20 CFR 617.3(cc).

⁶ The term contributed importantly means a cause that is important but not necessarily more important than any other cause. See 19 U.S.C. 2272(c)(1).

⁷ See 19 USC 2273(a). The high number of applications in FY2009 and FY2010 resulted in processing times of greater than 40 days. In FY2008, the last full year before the TGAAA expansions, the average processing time was 35 days.

⁸ Reasons for a training waiver include the following: the worker will be recalled reasonably soon, the worker has marketable skills for suitable employment and a reasonable expectation of employment, the worker is within two years of eligibility for a pension or Social Security, the worker is unable to participate in or complete training for health reasons, the worker cannot enroll in training immediately, or the worker cannot find a suitable training program.

⁹ "Reasonable cost" considers the cost of similar training at a different provider and the cost of training relative to the expected employment outcome. See 19 U.S.C. § 2296(a)(1) for legislative language and 20 CFR 617.22 for expanded definitions of terms.

¹⁰ Eligible programs include but are not limited to employer-based training, any training program provided by a state under Title I of the Workforce Investment Act of 1998, any program of remedial education, any program of prerequisite education or coursework required to enroll in an approved training program, any training program or coursework at an accredited institution of higher education, or any other training program approved by the Secretary of Labor. See 19 U.S.C. § 2296(a)(5) for legislative language.

¹¹ U.S. Department of Labor, "Trade Adjustment Assistance for Workers: Report to the Committee on Finance the Senate and Committee on Ways and Means of the House of Representatives,' December 2010, p. 24, http://www.doleta.gov/tradeact/docs/AnnualReport10.pdf.

¹² The 2009 Trade Activity Participant Report Handbook from DOL outlined reporting requirements for state agencies. It requires data collection on the type, duration, and cost of training, as well as if participants earned a credential.

¹³ Government Accountability Office (GAO), "Trade Adjustment Assistance: Most Workers in Five Layoffs Received Services, but Better Outreach Needed on New Benefits," GAO-06-43, January 2006, Appendix II.

¹⁴ Calculated from "TAA Statistics" page on the DOL website, http://www.doleta.gov/tradeact/TAPR_2010.cfm.

¹⁵ For a more detailed discussion of UI calculations and programs, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by Katelin P. Isaacs and Julie M. Whittaker.

¹⁶ For a discussion of eligible plans, see CRS Report RL32620, Health Coverage Tax Credit, by Bernadette Fernandez.

¹⁷ For full details on the formula, see 20 CFR 618.900-940.

¹⁸ See 19 USC § 2317.

¹⁹ U.S. Department of Labor, "Trade Adjustment Assistance for Workers: Report to the Committee on Finance of the Senate and Committee on Ways and Means of the House of Representatives," December 2009, p. 6, http://www.doleta.gov/tradeact/docs/AnnualReport09.pdf

²⁰ U.S. Department of Labor, "Trade Adjustment Assistance for Workers: Report to the Committee on Finance the Senate and Committee on Ways and Means of the House of Representatives,' December 2010, pp. 8, http://www.doleta.gov/tradeact/docs/AnnualReport10.pdf.

²¹ Mathematica Policy Research, "National Evaluation of the Trade Adjustment Assistance Program," ETA Occasional Paper 2010-06, April 2010. This study defined TAA participants as those that received one of the program's four core services (TRA, training, ATAA, or the HCTC). This definition is more restrictive than DOL's definition of a TAA participant.

²² Government Accountability Office (GAO), "Health Coverage Tax Credit: Participation and Administrative Costs," GAO 10-521R, April 2010.

²³ "Baucus Statement on Free Trade Agreements and Trade Adjustment Assistance," July 7, 2011, http://finance.senate.gov/newsroom/chairman/release/?id=63b61a78-287b-4869-bddf-02fd5c4994bc.

²⁴ "Statement from Senator Reid and Senator McConnell," August 3, 2011, http://democrats.senate.gov/pdfs/08032011-reid-mcconnell-statement.pdf.

²⁵ Press Briefing by Press Secretary Jay Carney, September 6, 2011, http://www.whitehouse.gov/the-press-office/2011/09/06/press-briefing-press-secretary-jay-carney-962011.

²⁶ John Stanton and Jessica Brady, "TAA Legislation Perched to Take Center Stage," Roll Call, September 7, 2011, http://www.rollcall.com/issues/57_24/taa-legislation-perched-to-take-center-stage-208501-1.html.