October 05,2004

Grassley: Trade Adjustment Assistance Reforms Yielding Progress


To: Reporters and Editors
Fr: Jill Gerber for Chairman Grassley, 202/224-6522
Re: Trade Adjustment Assistance
Da: Tuesday, Oct. 5, 2004

Sen. Chuck Grassley, chairman of the Committee on Finance, which has jurisdiction over international trade, offered the following comments today in a floor statement addressing the Trade Adjustment Assistance program. He submitted the floor statement for the record.

“Mr. President, I rise to address the progress that’s been made in how the Trade Adjustment Assistance, or TAA, program operates. You may recall that in 2002, I worked with Senator Baucus to shepherd landmark TAA reforms through Congress. President Bush acknowledged the role of TAA as an important part of his comprehensive trade agenda when he signed these reforms into lawin August of that year. The reform legislation made a number of changes to TAA, including, for thevery first time, the addition of a new health coverage tax credit, or HCTC, and a new wage insuranceprovision, as well as a doubling of the funds available for retraining workers dislocated by trade.Given the number and significance of the changes made to TAA, I joined Senator Baucus in askingthe Government Accountability Office, or GAO, to study how the TAA Reform Act is beingimplemented. Separately, we asked GAO to study how the health coverage tax credit is beingimplemented. The GAO report on TAA came out last month, and while it’s clear some of the detailsof implementation merit further study, overall the report shows a marked improvement in the wayTAA is administered.

“The GAO report notes that the Department of Labor has reduced its average petitionprocessingtime from 107 days in 2002 to 38 days in 2003, and the percentage of petitions processedin 40 days or less increased from 17 percent in 2002 to 62 percent in 2003. Certified workers areenrolling in training services more quickly than in prior years. More broadly, it is evident that thefunds available under TAA are beginning to be administered more effectively. One of the hurdlesthat Labor officials had to overcome was a perception, at least in some states, that all TAA-eligibleworkers are entitled to training. According to GAO, that perception contributed to problems withmanaging TAA training funds.

“In response, the Labor Department has encouraged states to take steps to better administerTAA funds. The Labor Department has also improved the way it disburses training funds so thatstate officials can better target the funds that are available to workers who are truly in need oftraining. These efforts are starting to pay off; in fact, after the GAO report came out, we learned thatthanks to improved administration by the Labor Department, $28.4 million was available at the endof the 2004 fiscal year for supplemental distribution. Last week my home state of Iowa received anadditional $559,626 in additional TAA training, job search, and relocation funds. These funds willhelp ensure that trade-impacted Iowans will receive the benefits they are entitled to under theprogram. The same is true for states across the country. I think we can all agree, Mr. President, thatit’s good to see our taxpayer dollars being spent more wisely.

“Unfortunately, the GAO report fails to capture the full breadth of the improvements madeby the Labor Department. The report states that 19 states temporarily discontinued enrolling TAAeligibleworkers in training at some point between fiscal years 2001 and 2003 because they lackedadequate training funds. However, GAO collected only aggregate data, so it is unclear how manystates temporarily discontinued enrollment before funding was doubled in the TAA Reform Act of2002, versus after. That information would have been helpful. The report does note that 6 statestemporarily discontinued enrollment during fiscal year 2004, which is quite puzzling given the factthat the TAA program had funds left over at the end of the year. I think it’s important to note thatLabor dispatched technical assistance teams to help those states implement needed improvementsso that workers could get access to training. Since there wasn’t any shortfall in funds, it seems thosesix states can work with Labor to administer the program more effectively. So, while Labor’sprogress has been impressive, there’s certainly more work to be done.

“The wage insurance provision known as alternative TAA for older workers is a brand newprogram, so it’s not surprising that implementation has not been without hiccups. But things areimproving. According to the Labor Department, as of August 2004, 32 states had already issuedalternative TAA payments and another 11 states had the capability to do so. In addition, 48 statesreported that information on the alternative TAA program is provided as part of their rapid responseactivities. Approved petitions for alternative TAA increased from 60 in fiscal year 2003 to 937 infiscal year 2004. Importantly, since alternative TAA went into effect in August 2003, well over 700workers have received assistance from this new program.

“As for the health coverage tax credit, it is also a brand new program. The just-released GAOreport shows that the HCTC was implemented at record speed and is providing valuable health carecoverage to thousands of displaced workers and recipients of benefits from the Pension BenefitGuaranty Corporation, or PBGC. While the initial take-up rate may not be as high as was estimatedat the time the TAA Reform Act was passed, even GAO noted that determining an actual rate ofparticipation rate is difficult. Not all workers initially identified as being eligible will meet all therequirements, and of those who do it is not apparent how many have access to healthcare coveragevia their spouse. In addition, enrollment numbers for the HCTC do not reflect all of the dependentswho also benefit from the HCTC.

“The Labor Department has reached out to educate the public about these and other aspectsof the TAA Reform Act. Labor officials conducted 15 training sessions with stakeholders across thecountry in fiscal years 2002 and 2003. During fiscal year 2004, six regional forums were held forworkforce practitioners in which Labor began focusing on policies and practices that integrateservice delivery to dislocated workers in need of services. Labor administers a wide array ofprograms for trade affected workers, including both TAA and the Workforce Investment Act, orWIA. In the past, these programs have been splintered, leading to inconsistent service delivery.Through initiatives started by the current Department of Labor, workers are now receiving a widerarray of services in faster time. While it’s clear more work remains, the GAO reports do bear witnessto the progress that’s been made.

“I will continue working with Senator Baucus to monitor developments and overseeimplementation of the TAA Reform Act. We must continue to assess how the program can beimproved. For example, there is currently no incentive for states to report the most accurateinformation possible. We should consider ways to improve the data that’s reported, so the TAAprogram’s true impact can be fully assessed. Additional study by GAO may prove helpful in this andother areas. Labor started its own five-year rigorous impact evaluation of the TAA program this year,and that should also prove helpful. But while there’s room for improvement, it’s also true that muchhas been accomplished, and I want to take this opportunity to thank the hard-working officials at theDepartment of Labor for their dedication in implementing the significant changes brought about bythe TAA Reform Act of 2002. I also want to thank officials at the Internal Revenue Service, theCenters for Medicare and Medicaid Services, and PBGC, along with those in state agencies, whohave worked so hard to implement the HCTC.”