March 14, 2009

debate on extending unemployment coverage

From the Austin American-Statesman:

After more than eight years as governor, Rick Perry has at times come into conflict with some of the groups of supporters that lifted him to the state's highest office.

But as he faces his toughest re-election challenge yet in the form of U.S. Sen. Kay Bailey Hutchison, a fellow Republican, Perry has made several moves, deliberately or not, that could repair fractures in his political coalition — even if it means further alienating Democratic voters and independents who haven't previously supported him.

On Thursday, Perry announced his opposition to $555 million in federal economic stimulus money to expand the state's unemployment insurance program. Perry repeatedly pointed to the higher unemployment insurance costs that businesses would face as more Texans (including people who are looking for part-time work) became eligible for the benefit.

"The governor was very clear since Day One that he is opposed to any part of this bill that would have an undue burden on taxpayers, long after the federal funds have dried up," Perry spokeswoman Allison Castle said.

Some background on the Unemployment Insurance (UI) joint federal-state program designed to provide temporary income support to workers who lose their jobs due to lay-offs or for other economic reasons, or who must leave their jobs through no fault of their own. Center on Budget and Policy Priorities:

An Overview of the UI System

The federal-state unemployment insurance system helps people who have lost their jobs by temporarily replacing part of their wages. Created in 1935, the system is a form of social insurance, with contributions being paid into the system on behalf of working people so they have income support if they lose their jobs. In addition, research has found that dollar for dollar, the income support from UI is a particularly effective “automatic stabilizer” for the economy as a whole, cushioning the impact of rising unemployment on consumer spending during economic downturns.

The basic unemployment insurance program is run by the states, although it is overseen by the U.S. Department of Labor. States provide most of the funding and pay for the actual benefits provided to workers; the federal government pays only for the administrative costs that states incur in running the program. (UI tax receipts and expenditures are, however, recorded as federal revenues and expenditures in the federal budget.) Although subject to a few federal requirements, states are generally able to set their own eligibility criteria and benefit levels.

The basic state-funded program typically provides up to 26 weeks of benefits to unemployed workers, and most states’ benefit formulas specify a replacement rate of 50 percent or more of a worker’s previous wages, with a cap on the maximum benefit.b There is also an extended benefits (EB) program, which is funded half by the federal government and half by state governments and which “triggers on” under certain, very limited conditions. The extended benefits program provides an additional 13 weeks of benefits (and up to 20 weeks in some states) to jobless workers in states where the unemployment situation has worsened dramatically. In times of national recession, Congress also typically enacts a fully federally-funded, temporary extension of unemployment benefits.

In an update the Center discusses how State imposed cuts have hurt vulnerable residents, but the Federal Economic Recovery Package is actually reducing the harm.

While this is not a new debate, it is new in the sense that the Federal Economic Recovery Package attempts to provide laid-off workers a better chance to weather this current severe job-loss 'great recession.'

Of course, of the problems with this debate is many evidently see no need to stick to the truth. The facts are what fit their particular argument. Still, extending unemployment coverage will mean that States will need to spend more of their own money - not necessarily through a tax increase, but for many that may be the only way to accomplish the extension. The alternative, to have more and more people at risk to lose their homes or unable to pay rent, to meet basic needs for their families, could be costlier for the state.

More about this later . . .

No comments:

Post a Comment