Diary

Some state unemployment funds drying up

CNN: Some state unemployment funds drying up

As Obama likes to say – “You can’t drill your way outof this problem”.

Now some state unemployment funds are drying up and I say:”You can’t tax your way out of this problem.”

“There are some real serious problems with unemployment funding that need to be addressed,” said Andrew Stettner, deputy director of the National Employment Law Project, a policy group that advocates on behalf of unemployed and low-wage workers.

The group, which tracks legislation and activity related to state and federal unemployment benefits, says that California (Blue-55), Michigan (Blue-17), Missouri (Trending Blue-11), New York (Blue-31), Ohio (Trending Blue-20), South Carolina (Red-8), Wisconsin (Blue-10), Indiana (Trending Red-11), Kentucky (Red-8) and Arkansas (Red-6) have less than six months’ worth of unemployment trust fund reserves, putting the funds at high risk of insolvency.

“These states are not ready for a recession, and they’re going to see a big hit if we have a protracted job slump,” Stettner said. “We’re going to see them seriously in the red, but they can take some action and not be swimming in red ink.”

When reserves run dry, states can borrow from the federal government’s unemployment trust fund. Typically, states have a year to repay the loan without accruing interest.

Michigan, which has the country’s highest unemployment rate, at 8.1 percent, is already borrowing from the federal government, even though it is not in the red just yet, according to a spokesman.

“Many of the states facing solvency challenges could be going into red as early as 2009, but it’s still early enough for them to get out of it,” he said. “The trick is to make a system that’s self-financing.”

Will fancy that! The trick is to make a system that’s self-financing.Well how do you do that? You create jobs! How do you create jobs?Create an atmosphere where a business can thrive! How do you do that?Give a company tax breaks and incentives to hire workers! The more a businessfeels like it can thrive the more the business will feel like itcan grow and pay higher wages. Business can work in conjunction withlocal colleges and trade schools to encourage workers to take classesthat will improve job skills.

If a business feels a constant squeeze from a FedZilla that wantsmore and more tax dollars to support more pork barrel projects andgross mis-management then those business’s will shutter ormove to another state or move completely out of the country.

An Obama presidency would put such a squeeze on small to mediumsized business’s – I fear this could really accelerate the U.S. intoa depression – one that we would not be able to tax our way out of.