Utica, NY (WIBX) - Senator Chuck Schumer made his way to Utica yesterday to announce legislation he's introducing that aims to circumvent the federal government from charging the state interest on unemployment insurance. "And, I'm doing it retroactively so companies like this one, can get the money they paid in back. USA Sowing can get the money that it paid back," he said. Standing in front of workers at the plant on 901 Broad Street in Utica, Schumer says fighting among democrats and republicans led to congress not renewing the interest-free provision.

Schumer said, "The lesson from what happened in Washington is two folds. First, that we should never risk default again it is serious consequences to the country and, no one should stay in their corner and say, 'It's only my way or default.' He says the second lesson is for congress to come back from summer recess and focus on creating jobs. In a released statement the democratic senator explained that because New York borrowed $3 billion to pay for its unemployment programs, it now owes the federal government $95million in interest, which is being passed on to businesses like, USA Sewing, through an employee tax. The tax for each employee is $21.25.

Company President, John D. Inserra said, "The surcharge, we didn't care about it, it's the unemployment rate. They took us from like 3 percent to 9.98, that's the culprit. The surcharge to me ... was it a shock? ...yeah, it's like the pig coming back and getting more food. But, the unemployment taxes are 100 fold compared to the surcharge." USA Sewing Inc., manufactures Kevlar gloves for the Army through Department of Defense contracts. The group is currently competing for another military contract to continue producing the gloves.

Officials say, if approved, "The Schumer bill would extend interest-free borrowing through 2012, and waive the interest payments from 2011, thus relieving New York small businesses of a $95 million tax. By requiring states to refund the money, Schumer's legislation would guarantee that small businesses are the ultimate savers, and would see a full refund of their surcharge payment." Officials with the Labor Department say the state average surcharge is about $18 per employee.