Thursday, March 12, 2009

Gov. Rick Perry Rejects Federal Money To Aid Unemployed Texans

Concerns over Texas Gov. Rick Perry's (R) intent to not use federal stimulus money to aid the unemployed have been answered.

Gov. Perry announced today he is blocking the state from accepting $550 million in federal stimulus benefits targeted to aid unemployed Texans, even as the Texas jobless rate continues to jump. (see Governor Perry's speech in Houston or the Burnt Orange Report's compendium of reactions to said speech)

Gov. Perry joined fellow conservative Republican governors of Alabama, Georgia, Louisiana, Mississippi, South Carolina, Alaska and Idaho in opposing the extension of unemployment insurance made possible by the federal stimulus grant.

In his February letter to President Barack Obama Gov. Perry accepted all of Texas' $17 billion share of the federal stimulus money, "to promote economic growth and create jobs in a fiscally responsible manner." However, the language Perry used in his letter and in subsequent public statements left open the question of how he will, in fact, use the stimulus dollars in Texas.

Gov. Perry's plan to turn back stimulus money targeted to aid unemployed workers follows a similar announcement by South Carolina Gov. Mark Sanford. ABC News reports that South Carolina Gov. Mark Sanford (R), who co-authored an editorial criticizing the stimulus plan with Gov. Perry, will send a letter to President Obama in the next few days asking for permission to use approximately $700 million of South Carolina’s stimulus money for purposes other than the purposes specified in the stimulus legislation.

If Pres. Obama rejects Gov. Sanford’s request to use the money according to his conservative agenda, the governor indicated he will reject the $700 million in stimulus funds, which are under his discretion. Texas Gov. Rick Perry may also turn down federal stimulus money on arguments that government intervention to stimulate the economy and help unemployed workers remain in their homes and put food on the table for their children runs contrary to his conservative principles.

U.S. unemployment will approach 10 percent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists. According to the latest foreclosure stats from research firm RealtyTrac, default notices, bank repossessions and other U.S. foreclosure related activities jumped 30% in February from the prior year. That’s more than 290,000 filings nationally and a 6% increase from January.

According to the Texas Workforce Commission, Texas’ unemployment rate rose to 6.4 percent in January, as the U.S. unemployment rate rose to 7.6 percent. In the Dallas, Fort Worth and Arlington area, the January 2009 unemployment rate was 7.1 percent, up 1.2 percent from the 5.9 percent rate in December of 2008 and up 2.5 percent from the January 2008 rate of 4.6 percent, according to a release. Texas’ seasonally-adjusted non-agricultural employment lost 75,800 jobs in January.

The Texas Workforce Commission announced that the unemployment trust fund is now expected to be almost depleted by October. The commission issues monthly projections and each has been gloomier than the last. By law, the trust fund must stay above $858 million at the beginning of the fiscal year in October. At the current rate, the fund will be $812 million below the floor, commission executive director Larry Temple told the House special stimulus committee yesterday.

And a $812 million deficit means somebody’s gotta pay – and that somebody, according to Temple, will be Texas employers. Temple said the fund can raise money to pay unemployment benefits in three ways: 1) By borrowing from the feds (and paying interest on the loans) 2) By issuing bonds (also involves paying interest) and 3) By raising taxes on employers. He said the commission’s strategy would probably involve a combination of the three.

However, combo or no combo, even if TWC borrows from the feds or floats bonds, the employers will be the ones funding the debt.

Dunnam made this clear when he asked Temple, “Do any of [the scenarios] involve anyone other than employers paying for the deficit?” Temple responded, “No.”

Here’s where the stimulus comes in: Don Baylor, a senior policy analyst at the Center for Public Policy Priorities, said if Texas changes its eligibility statute and accepts the stimulus funds, employers will still have to pay an additional $294 million in 2010 to make up for the deficit. But without the federal funds, employers will pay an additional $935 million to make up for the deficit in 2010.

Sure does sound like taking all of the federal stimulus money available for unemployment insurance would be a good deal all around, doesn’t it? It eases the tax burden on businesses, it helps many more people, and by helping more people it has a stimulative effect on the economy. Which was the point, after all. You’d have to be a blinkered partisan zealot not to see the benefits. You know, like Bill Hammond, the president of the Texas Association of Business:
[Hammond] presented a bold proposal to “save” $630 million a year in unemployment benefits payouts, which included measures such as greatly restricting or eliminating benefits for people who receive severance pay. He also said the commission didn’t do enough to ensure people are looking for work while they’re receiving benefits: “The commission is allowing [unemployed] people to sit on their laurels.”
Or we could just eliminate the idea of unemployment insurance altogether. Who cares what happens to these people that get laid off, anyway? They’re just a bunch of lazy bums who want to suck Bill Hammond’s blood. Where’s the compassion for that, I ask you?

Well, I suppose it’s all academic, since Governor Perry has now officially rejected the unemployment insurance funds. Hope all you business owners that will see your taxes go up more than they needed to will appreciate that. Perry made the announcement right here in Houston, which is somewhat ironic.
Houston’s growth advantage over the rest of the nation during the past five years–oil and natural gas–has not only evaporated in the face of a global commodity bust but has turned into a definite liability. The coming year will see significant job losses in Houston, led by the energy sector.
Via Texas Politics. Too bad Governor Perry won’t be joining any of these folks on the unemployment line until at least 2011, by which time one hopes the job market has improved. It’s good to be the king. A statement from Texas AFL-CIO President Becky Moeller in response is beneath the fold. BOR has more, including Kay Bailey Hutchison’s timid response.
Texas AFL-CIO President Becky Moeller today issued this statement in reaction to Gov. Rick Perry’s announcement that he opposes acceptance of $555 million in federal economic stimulus funds for jobless workers in Texas: “Today Gov. Rick Perry said to the workers and employers of Texas: ‘What crisis?’ The governor’s decision to reject $555 million in federal unemployment insurance funds available in the economic stimulus package amounts to a callous statement to tens of thousands of Texans who are losing their livelihoods that Texas does not have their backs.”

“Playing 2010 or 2012 politics when Texans are suffering in 2009 has nothing to do with good public policy. The Texas AFL-CIO has worked with lawmakers who are carefully exploring the ramifications of accepting the UI funds. The stimulus package essentially covers for seven years any cost associated with making UI benefits more accessible to workers who have lost jobs through no fault of their own. If today’s decision stands, employers will start paying an additional $555 million in taxes in January, courtesy of the governor, and Texas workers who desperately need help will be left to fend for themselves.”

“In short-circuiting the legislative process, Gov. Perry is telling employers that it is better to pay $555 million extra to keep the current lousy UI system than to pay an incremental increase seven years from now for a better system.”

"Here’s hoping the Legislature sees this issue differently. This is no time to demonize workers who are victims of the worst economy America has seen since the Great Depression.”

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