Seriously Alabama.
Alabama is a welfare state. We are in the top five states in taking money from the federal government compared to the money we pay in. We are not the fiercely independent,damn the federal government rebels that our bumper stickers, t-shirts, songs and flags imply.
If any Alabamian complains about bailing anyone out of foreclosure, he or she is an ignorant hypocrite. Every person in Alabama, even the most successful business folk, have been bailed out by the federal government for decades as transfused federal money flows into our economic arteries.
Governor Riley is one of those governors who is saying that on behalf of the good people of Alabama he will refuse some of the money from the federal economic stimulus program. Unemployment compensation. Probably nobody will need that in the next year or so. It's funny, I don't remember him refusing money in years past.
Governor Riley may have legitimate reasons for opposing the stimulus package. He may be right about some of his concerns. Nobody knows what will happen.
But the stimulus package passed. The policy argument is over. The money will be paid out to somebody. There are people in Alabama who need help. It is Riley's job to look out for our best interest.
There is only one reason Governor Riley would make noise about refusing the money. We know the word too well here in Alabama. POLITICS.
But I can't believe, as governor of the State, he is risking the very lives of Alabama citizens in the uncertain economic days ahead. Where will the money come from if our economy stalls?
Next thing you know Governor Riley will be saying that President Obama is not qualified to be president because he is not a citizen.
No, wait, Alabama Senator Shelby beat him to it. Yesterday.
Please, Alabama. We are smarter, and better than this.
We can still rise.
(Contact Governor Riley and give him your opinion http://www.governor.alabama.gov/)
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How does the struggling small business owner continue to keep all his current employees AND pay the resulting higher taxes once the stimulus funds are depleted? It seems like getting a monetary gift and using it to go on vacation instead of applying it to legitimate future needs (e.g., car tires/repairs, insurance premiums, medical bills, school supplies). Wouldn't jobs end up terminated?
ReplyDeleteYes, we are a welfare state, and many (myself included) have benefited from welfare's help when struggling. There is much abuse and waste in the system, according to my friend who was Alabama's state welfare fraud prosecutor. Maybe we should spend resources overhauling the engine instead of just getting a new paint job on an old vehicle.
Any ideas how to do this?
I appreciate the good comment.
ReplyDeleteJust to put in context what we are talking about, unemployment compensation contributions are paid by about 90 percent of American workers, and up until now, are collected by about thirty to forty percent of workers who leave their jobs. The benefit is limited to a certain period of time, usually 26 weeks nationally, subject to extensions by the federal government, currently an additional 13 weeks, in times of recession. The national average on the size of the weekly benefit is one half of the workers average earnings.
According to Governor Riley, the stimulus money, were we to take it, would run out in about four years. Being the cynic that I am, I don't think it would last even that long. My understanding is that there would be no unemployment tax increases attributable to the stimulus bill until that time, and only if the state decided not to change the program. I may be wrong, but that's the way I understand it. If you find something different let me know.
So, it does no harm as far as additional expense to business for 3 or 4 years. And then the situation can be changed by the State. The program is intended to get us through the hardest part of the recession/depression. Hopefully that will level off within 3 years and the demand on the unemployment system will have eased. If not, well things will be real bad. So I am in favor of it, but, if this is intended to be a temporary fix, there needs to be pressure to review the system every 12 months or so to see if it can revised. Unfortunately we are not too good at that sort of thing.
Keeping workers from falling into poverty is a nice notion. But I also think it would be bad economic policy for all of us to let it happen, I'll try to find some sources who discuss the pros and cons and post them. Feel free to do the same.
And yes, there is abuse of the system. Not just unemployment compensation, but in all systems in which the State pays out money. I assure you that fraud is not limited to the recipients of uc or welfare. They just get their money in much smaller amouunts than some who have a bit more clout.
We must run it all more efficiently. But that takes more staffing, which costs money, which means taxes.
The problem with this is that the fix is not "temporary." Once the money is accepted by the states, the states have to make this permanent after the fed money runs out. In effect, the states would have to increase taxes on its people in order to pay the additional expense that would come. It is stated in the stimulus bill (permanence requirement), a fact that most legislators fail to talk about because they never read the bill.
ReplyDeleteI have heard people speak of the "permanency" requirement, but have not found it in my admittedly quick read of the conference report. I am reading a pdf version without search capability. If you could give me a bit of guidance where that language is located my old eyes would be grateful.
ReplyDeletebob
I wish I could give you guidance on where to look. I, myself, would like to see it, but find that scouring through the pages of the ARRA is quite time consuming - something I seem to be lacking these days. What I have found concerning this comes from various news sources, both liberal and conservative, and from people who have read the bill, i.e. the Governor of Louisiana.
ReplyDeletehttp://gov.louisiana.gov/index.cfm?md=newsroom&tmp=detail&articleID=1016
It seems to me that if Gov. Jindal was trying to garner political points with his conservative base, he wouldn't accept any of the stimulus money. However, that is not the case. He has read the bill and urges other governors to do the same.
Another source was from The Huffington Post.
SUMMARY: AMERICAN RECOVERY AND REINVESTMENT
AS PASSED BY THE FULL COMMITTEE
http://big.assets.huffingtonpost.com/appropssummary.pdf
Unemployment Insurance Modernization: Provides funds to states though a “Reed Act” distribution, tied
to states’ meeting specific reforms to increase unemployment insurance coverage for low-wage, part-time,
and other jobless workers. (page 11)
The "tied to states' meeting specific reforms..." definitely sent up red flags.
The last article I will mention is from Heritage.org which details how this bill will change the landscape of welfare benefits in our country.
http://www.heritage.org/Research/Welfare/wm2287.cfm
While I have no problem helping those who have legitimate needs, I do have a problem with usurping states rights in order to grow the Federal government and "spread the wealth."
One of the things that drove me to read the ARRA was viewing links like those. I couldn't tell whether they were basing their opinion on the language of the bill or prior behavior of government. I still am not sure.
ReplyDeleteSo far the only language I can find in the act regarding the continuing legal obligation of a State to the Federal government was a provision that a State could terminate the agreement with thirty days notice. That was only in the basic uc provision, so I don't know whether it applied to the other parts.
I want to know whether there are legal conditions that prevent States from backing out if they need to, or is it just the practical reality that a governor or state legislature does not want to get in the politically tricky position of having to reduce benefits in a couple of years after the federal money runs out. If that is all it is, I say they need to take the money and deal with the political problem later.