The nation’s unemployment crisis is impeding an economic recovery. America’s GDP is growing, the stock market is looking better, foreclosure rates are leveling off or getting better in some of America’s hardest hit communities, but the unemployment rate is still astronomical. The January 2010 unemployment rate was 9.7 percent, which translates to 15 million people out of work. This does not count discouraged workers, those who’ve basically given up on finding a job.

Yesterday, the Center for American Progress (CAP) released a memo urging Congress to extend unemployment benefits and fix the unemployment insurance (UI) system. CAP even suggests using TARP money to fund the UI trust funds.

“Policymakers must address the insolvency of the UI Trust Funds. The states are supposed to pay for higher benefits during hard economic times by setting aside funds during good times into their “UI Trust Fund.” Then when unemployment rises and more people claim benefits, there are funds available without having to pro-cyclically raise taxes during a recession.” Source: A Better Way to Help the Unemployed (PDF)

The CAP memo goes on to explain that right now 27 states don’t have money in their UI trust funds so have borrowed more than $30 billion from the federal government. This includes nearly $7 billion in loans to California, which has been hit hard by a state budget crisis and $3.3 billion to Michigan, which is still reeling from the auto industry fallout.

Once the nation’s largest banks began paying back TARP funds, the government and other agencies have been trying to figure out how to best put this money to use. Recently, President Obama announced his desire to set aside $30 billion from TARP monies for a Small Business Lending Fund.

While providing better lending opportunities to small businesses is needed and it will help these business owners hire more workers, it is not likely to make much of a dent in the overall unemployment figures. It also doesn’t provide immediate financial assistance to those that are out of work now. Funding state trusts through TARP money is one way to ensure that those that need unemployment insurance get it without added delays.

The Center for American Progress is also asking Congress to revamp the way in which unemployment benefits are extended. Currently, action must be taken to extend unemployment benefits during times of long-term high unemployment. These extensions are for a fixed length and once the term expires, Congress has to pass another extension.

CAP is encouraging Congress to look at this from a different perspective. Instead of continually acting to extend unemployment benefits and unemployment compensation, keep it in an “always on” state during an unemployment crisis. Set a point at which the program turns off. CAP is suggesting a few different turning off points including when a state’s unemployment rate falls below 6.5 percent for a three-month average. At this point, the extended benefits automatically stop. Congress does not need to take action to eliminate the extended benefits.

The ideas presented by the Center for American Progress are sound and target one of today’s biggest economic woes, unemployment. Combining this approach with the green jobs training grants, Small Business Lending Fund, clean energy grants, and other similar programs will help support those that are out of work as well as provide opportunities for these individuals to return to work.

The opinions expressed by MNN Bloggers and those providing comments are theirs alone, and do not reflect the opinions of While we have reviewed their content to make sure it complies with our Terms and Conditions, MNN is not responsible for the accuracy of any of their information.