Surprise: After Mandating Unemployment Benefit Expansions 40 States May Need $90 Billion In Bailouts

• December 22, 2009

I’ve posted before about unemployment benefits expansions mandated by the “stimulus” spending spree were depleting state coffers. Now that problem is growing more acute as the economy continues to shed jobs, and as many as 40 states may need a federal unemployment bailout.
This despite the Obama administration declaring the recession over.

The recession’s jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.
The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

More often than not, per post I’ve written on this subject earlier, local governments are opting for higher taxes. Which is ludicrous, because those taxes are on the very businesses we want to start hiring these people so that we don’t have to pay them to be unemployed any more.
Think about it for a moment, because that’s exactly what we’re doing. We’re taxing the people who create the jobs to pay the people we want to be working to stay unemployed.
Expanded unemployment benefits begets more unemployment. That’s reality. The Institute for the Study of Labor in Bonn, Germany (hardly a bastion of right-wing conservative thought) concluded in a study in 2008:

The evidence suggests that benefit generosity increases unemployment. We view this evidence as fairly robust since the estimates are similar across alternative specifications. The magnitudes involved are rather substantial and appear to be relatively high compared to estimates available elsewhere in the literature.

Maybe instead of “helping” people by making them dependent on government we should stop burdening businesses that create the jobs with taxes? Or does that make too much sense?

Tags: Asshats, Domestic Issues, Politics

http://Array Bob

I never usually comment on these articles but as I sit in Tokyo waiting to to return to the “Land of Free and Home of the Brave” I have a moment. I am a Government Employee involved in the National Defense of our Country. I spent 21 years of service in the US Army. I worked for many years at below a “Living” wage because I love my country. I hate to hear all of the disparaging against Government Employees. I work 60 to 70 hours a week and claim 40 hours. I do this because of the work ethic I learned in the Army “Work until the Job is finished” National Security is never Finished. Some of us trained for positions that most of you would not want to do and have showed no inclination to serve our country.

All that said. I am a bonafide conservative. I would elimate all welfare tomorrow. I might would trade Universal Health Care for Welfare. If you don’t work you don’t eat; it is that simple. Black and white no grey zone. Your family, your church, or whatever is your safety net. Identify the father and mother of every single child living in a home and required the non-custodial parent to provide the level of support required; what no job – the kid still has to fed, clothed, and housed. Cut all federal employees salary by 10% (Yes I am one). Limit federal compensation to 100K with no cola for expensive areas – Obama and his clan too. Require all members of congress to be on the same medical plan they vote for us.

Creating jobs. Remove all capital gains taxes for 5 years and reinstate at 5% after five years. Implement the Fair Tax immediately.

Oh, not just a government employee. Realestate investor, stock trader, small business owner with wife and retired soldier.

I just want everyone to be treated fairly. You work, you eat. You don’t work, you don’t eat.

How is all that Hope and Change working out for you.
james Freeman

Tax rate on upper middle class will soon be 39%. Oh yea, state tax of 6%. Oh yea, might lift the social security cap if you make more than 200k. 8-16 % (I am self-employed). And if one is “rich” and makes more than 200k, might get a 5% war tax. And, who knows, a future 5% tax to pay for other people’s medical care.

39+6+16+5+5…. Hmm, in a few years might be taxed as much as 71%. Unless we get rid of the socialists that run the country…….

How much of my income should the government be able to steal? 40%? 50%? 60%? 70%? Is taking 70% of my income “fair?”

I can make in the 200k range working 30 hours a week. What is my motivation to work more than 30 hours a week if I get to keep a quarter of every dollar I make past that?

Oh, by the way, many of us will be part of the “evil rich” soon. Does anyone doubt massive inflation is on the way? Anyone making $ 60-70 k now will need to make &200 k just to break even in another 5-10 years if the trillion dollar deficits continue.

I guess the simple fix is to tax folks who actually produce something and create more government jobs. Is that not what the stimulus funds have done? Most of the jobe created and “saved” have been government jobs. Oh wait, they get paid from where? Oh yea, taxes. The stimulus money has in effect created nothing more than a transfer of jobs from those who produce taxes to those who consume taxes.
Paul G.

Corporations don’t pay tax – they add it to their cost of doing business and it gets passed on to the consumer in the form of a hidden tax. In addition to that, corporate taxes drive companies off shore. I am truly baffled as to how can anyone could logically support this method of taxation.
sayanything-15427

The government (in any form) should be a symbiotic relationship, a symbiote for those of you who failed high school biology lives in harmony with its host, getting things like sustenance and security from them while the host gets toxins cleaned out of their blood or muck cleaned from their skin.

This Federal Government and all liberals are Parasites, they feed on the host without any care for what happens to it because they are too stupid to see that if they kill the host, they die too. (see tapeworm, hookworm, heartworm)
Terry G

DINO,
Iâ€™m sure you donâ€™t mind higher taxes, most people who think this way donâ€™t pay taxes, sure they pay some payroll taxes but at the end of the year they get a check for more than what they paid into, these people are known as welfare recipients even if they are working or not, they are a burden on the society and should not be allowed to vote. If you donâ€™t contribute to â€œyourâ€ country, you donâ€™t get a say as to who gets elected, btw, The individual citizen has no federal constitutional right to vote (do a web search on right to voting and supreme court)
Letâ€™s put another wrench in your gears, cutting taxes do bring more revenue and jobs, but there are politicians who love power and keep adding mandates and regulations to businesses, which in turn cost more to produce a product, the options are to raise prices and become less competitive or lessening the workforce (the most expensive cost to business) to stay competitive
Soâ€¦ Dino, do us a favor and get with your likeminded friends, open a business and see if you can survive for more than a year trying to keep up with all the tax laws, regulations, and mandates. You canâ€™t and you wonâ€™t, it is so much easier to complain than to understand what youâ€™re complaining about.
Please donâ€™t forget about the business owner working 50-60-70 hours a week to keep their business goingâ€¦ and of course, to pay the higher taxes you think they should pay, but Iâ€™m sure you think 40 hours is enough for you.
If you do get a chance, try reading â€œAtlas Shruggedâ€â€¦ but it may hurt your head.
Guest

Fed tax revenue was up in the Bush years. People seem to forget that. Lower taxes plus higher spending helped get us into this mess. Now we are going to have higher taxes and even higher spending.
sayanything-4625

Dino, you are a fool of the first order. California has passed tax hike after tax hike and they only have 3/4th’s of the money they need to run the state this year. This after they passed tax increases in 2007, 2008 and 2009. After all that its still not enough money. The fact that your dumb ass has singled out Oklahoma is funny.
pete b

here in ohio my workers comp payments for 2010 will be double what they were in 2009.My State unemployment tax has increased by about 25% and the federal unemployment tax will increase we just don t know by how much. All these increases will do is cost one or two of my employees their jobs. leeches know not to kill the host ,our government hasn t figured that out yet
Military Officer for 30 years

DINO, you are just a mindless slug. I am tired of supporting worthless POS’s like you and your welfare class brothers and sisters. I work hard for what I earn, and the government has no right to take it away for anything that is not STRICTLY CONSTITUTIONALLY MANDATED.

Welfare is not in the Constitution, no matter how you twist it. Get a job. Stop drinking the Kool Aid and eating acorns by the bagful. It is morons like you who will have us all in the poor house and/or fighting to stay alive and free.

I note your avatar. Not so much ambiguous as Anal, I take it.
jebryan

The first line of the article says it all “Oklahoma gives away billions of dollars in tax revenue…” Governements (local/state/government) can NOT give away money. They create no wealth and have nothing to give away. They first have to seize money from producers and then dole it out as they see fit. It is insane the way the Media portrays it and the public buys this “tax give away” crap. The money belongs to the people/businesses/shareholders first. How is it possible to give people something that they earned?? That gripes me to no end that people have a problem with corporations keeping more of what they earn.
sayanything-4416

Change your name, SPort?

Only really, really stupid people still think 90% of the tax they pay goes to welfare.

That’s your ignorance, selfishness and fear talking.
sayanything-4416

As I posted elsewhere, cutting taxes for those “job creators” didn’t do a THING to create jobs in the bush years.

The states are still broke because so many readjusted their tax systems over the conservative era, placing more dependence on unreliable sources like income and sales tax and less on reliable sources like property tax. That was to help the rich and the corporate. Was fun while it lasted, wasn’t it?

That’s what my state did. What California did. What Texas did. What Oklahoma did in a big way.

Oklahoma has been on a binge of cutting taxes for the rich and privileged and now has the worst budget hole of any state.

Oklahoma Lawmakers Eye Business Tax Breaks Amid Budget Shortfall

Oklahoma gives away billions of dollars in tax revenue through hundreds of exemptions, credits and deductions that some lawmakers say the state may no longer be able to afford as it slips deeper into a revenue shortfall.

Tax breaks have been granted to manufacturers, farmers and ranchers, oil and gas producers and a variety of other groups over the years as lawmakers work to encourage economic activity.

But officials say some of those tax breaks could be suspended and others eliminated to keep revenue flowing for public education and safety programs and to state agencies that provide health care to the poor and meals to the elderly.

The state imposes sales taxes on basic necessities like food, but tickets to professional sporting events – a luxury for many people – are exempt from sales taxes, Morrissette said.

The shortfall is forecast to deepen in the coming months as revenue remains static and new tax cuts approved by state lawmakers kick in, said David Blatt, director of policy for the Oklahoma Policy Institute.

Tax cuts scheduled to take effect next year include the final phase of repealing the state estate tax, which disappears in 2010, as well as another increase in the standard deduction for Oklahomans who do not itemize their income taxes, Blatt said. The standard deduction currently costs $685.5 million a year, according to the Oklahoma Tax Commission.

In addition, seniors will have broader eligibility to deduct their retirement income.

“Tax cuts are still phasing in,” he said. “With some foresight the Legislature could have looked at the tax cuts that are still scheduled to take effect.”

In addition, the Republican-controlled Legislature has reduced the state income tax from a top rate of 6.65 percent to 5.5 percent in recent years. Another cut in the top income tax rate, to 5.25 percent, will take effect once revenue is projected to grow by more than 4 percent over the previous year.

Blatt’s organization estimates the income tax cut will have a revenue impact of more than $100 million and will be triggered in 2011.

Blatt said the budget shortfall could total up to $700 million for the fiscal year that ends June 30, a 14 percent decline in revenue from the previous year. Revenue will be $1.5 billion less than about three years ago – a 25 percent drop in tax collections.
sayanything-4416

You’re just a lazy, overpaid government worker.

I hope Obama fires you.
thepragmatist

Huh?
The “Bush Years” had some historically LOW rates of unemployment. The States are broke largely because property taxes (and income taxes) are not being paid by foreclosed-upon homeowners, while still maintaining “programs”……so much for your “reliable” income source theory.
Ronald Reagan proved that cutting taxes (and letting people keep more of their money) stimulates business and job creation.
Bush didn’t make people buy 7 houses for $0 down. Bush didn’t force people to buy $50,000 suv’s that get 8mpg. Bush also didn’t make people rack up tens of thousands of $’s in credit card debt on clothes, dining out, and vacations. We’re all paying the price for these excesses, and the Republican/Conservative model is a PROVEN solution.
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Jhalstead77

Why are employees paying a wage tax? isn’t it unconstitutional? Income tax refers to corporations so why do all Government programs base everything off gross income when most people do not ever see that with-held 33%? Because America has become the greedy whore that we fled from. ” Long Live the King” 200 hundred years later and the jokes on us.

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Surprise: After Mandating Unemployment Benefit Expansions 40 States May Need $90 Billion In Bailouts

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