Reed’s Bill a Home Run for Unemployed, Businesses, and the State
Tuesday, February 22, 2011
As if battling an 11.5 percent unemployment rate and massive debt were not enough, Rhode Island could soon be forced to pony up tens of millions of dollars in payments to the federal government and raise taxes on already struggling small businesses to cover its unemployment benefits tab unless Congress takes action.
The Great Recession has left states all over the country with depleted unemployment trust funds. Like others, Rhode Island borrowed millions of dollars from the federal government to meet its obligations to laid off workers. Under the terms of the loans, states have to pay the interest back first. In addition, federal law requires states to raise unemployment taxes on businesses to backfill the trust fund.
You don’t have to be Einstein to know that this is not a particularly smart move when small businesses are struggling just to keep from laying off workers and states are fighting just to provide basic services.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn an attempt to halt this counterproductive and endless, unemployment-perpetuating cycle, Senator Jack Reed has joined with Illinois Sen. Richard Durbin and Ohio Sen. Sherrod Brown in introducing the Unemployment Insurance Solvency Act.
Under this legislation, state interest payments will be waived for two years; states will have the option not to raise taxes on businesses and states that enact a solvency plan for their unemployment funds without reducing benefits will have part of their debt forgiven. Even better, both the National Employment Law Project (NELP) and the NONPARTISAN Center on Budget and Policy Priorities say the proposal is BUDGET NEUTRAL.
According to the Christian Science Monitor, Republicans have also proposed a plan to shore up the trusts funds – albeit one with a slim connection to reality.
First, Republicans would suspend the federal unemployment tax at a cost to the federal government of $7 billion a year. This will be offset by the devastating $61 billion in budget cuts passed by the House.
Republicans also want to mandate that people receiving unemployment checks work in a part-time job for a six-week trial period. This, they say, will result in people returning to work faster and thus fewer unemployment payments and less unemployment taxes.
Would that it were so simple. Countless workers are already working in jobs for which they are vastly overqualified or would actually work a part-time job if they could find one. The simple fact of the matter is that this is a complicated, long-term problem that needs a sophisticated solution, not a tag line or a sound bite.
Rob Horowitz is a strategic and communications consultant who provides general consulting, public relations, direct mail services and polling for national and state issue organizations, various non-profits and elected officials and candidates. He is an Adjunct Professor of Political Science at the University of Rhode Island.
Related Articles
- Cicilline Bill Takes On Longtime Need for Responsible Gun Control Measures
- States Key to Climate Change, Energy Independence
- Obama’s Recovery: What Does It Mean for RI Politics?
- Chafee: Odd Man Out?
