NU Online News Service

WASHINGTON--A provision extending the National Flood Insurance Program until May 31 is included in bipartisan Senate legislation aimed at creating jobs.

The Hiring Incentives to Restore Employment Act (HIRE) was introduced yesterday as a result of talks earlier this week between representatives of the congressional Republican leadership and President Obama.

Officials at Washington Analysis, which provides advice on Washington legislation and regulation to institutional investors, said that with Congress out for the President's Day recess next week, action on the bill should not be expected until the following week.

Republicans have been holding up all legislation as part of ongoing quarrels over with White House legislative efforts.

The bill was introduced by Sen. Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, the chairman and ranking minority member of the Senate Finance Committee, respectively.

A main purpose of the bill is to offer incentives to businesses to hire new workers amidst the continuing economic downturn.

The fate of the legislation, however, could be questionable because Sen. Harry Reid, D-Nev., the Senate majority leader, has said he would only move portions of the bipartisan legislation.

It includes the provision extending authorization of the NFIP until May 31. Currently, the NFIP is on its fourth extension since expiring Sept. 30 of last year, the end of the last fiscal year. The current extension expires Feb. 28.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, indicated last week that he would seek another temporary reauthorization of the program.

Since job-related legislation is a priority interest in the House, strong support there is also expected for this legislation.

Blain Rethmeier, a spokesman for the American Insurance Association, said including the provision in this particular piece of the legislation is good news.

"We're glad that the program can continue to be funded but would obviously like to see more meaningful reforms," Rethmeier said.

"In a perfect world, Congress would have the time necessary to address the issue," he said. "However, given the current timetable and agenda in Washington, that's simply not in the cards for the time being."

One key provision in the bill offers an exemption from Social Security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days.

The maximum value would be equal to 6.2 percent of wages up to the FICA wage cap ($106,800). There would also be an additional $1,000 income tax credit for every new employee retained for 52 weeks to be taken on the employer's 2011 income tax return. This proposal is estimated to cost $13 billion over ten years.

Another would extend 2008 and 2009 section 179 expensing thresholds so that taxpayers may elect to write off up to $250,000 of certain capital expenditures (subject to a phase-out once expenditures exceed $800,000) in 2010 in lieu of depreciating those costs over time. This proposal is estimated to cost $35 million over 10 years.

In another provision sought by employers of all sizes, the bill would provide "temporary, targeted" funding relief for single employer and multi-employer pension plans that suffered significant losses in asset value due to the steep market slide in 2008. The pension funding provisions raise about $6 billion over ten years.

The legislation would also extend current law, including increased unemployment benefits and COBRA premium assistance, through May 31.

The COBRA provision would extend the 65 percent COBRA premium subsidy for terminated workers as well as make technical clarifications to the program. The proposal is estimated to cost $3 billion over 10 years.