A major talking point of the Republican governors who are not going to take the unemployment funds in the stimulus bill is that it is a permanent tax increase, but by looking at the bill, it is clear that potential 2012 Republican presidential candidates Bobby Jindal, Haley Barbour, and Mark Sanford are at best wrong, or even worse, lying.
Here is what Gov. Jindal (R-LA) said on Meet The Press today, “Well, it, it’s–no. The $100 million we turned down was temporary federal dollars that would require us to change our unemployment laws. That would’ve actually raised taxes on Louisiana businesses. We as a state would’ve been responsible for paying for those benefits after the federal money disappeared… If you actually read the bill, there’s one problem with that. The word permanent is in the bill. It requires the state to make a permanent change in our law. Law B–our employer group agrees with me. They say, “Yes, this will result an increase in taxes on our businesses, this will result in a permanent obligation on the state of Louisiana.”
Gov. Barbour (R-MS) said on CNN’s State of the Union, “There is some (stimulus money) we will not take in Mississippi. If we were to take the unemployment insurance reform package that they have, it would cause us to raise taxes on employment when the money runs out, and the money will run out in a couple of years. Then we’ll have to raise the unemployment insurance tax, which is literally a tax on employment. I mean, we want more jobs. You don’t get more jobs by putting an extra tax on creating jobs.”
Gov. Sanford (R-SC) said that the bill would require his state to cover part-time workers, “What we would be required to do would be, for the first time, increase the level of benefit for part-time workers. Right now, it’s full-time workers — increase it to part-time workers. We can’t pay for the benefits already in the program, but to get the stimulus money, we’ve got to increase the program’s size and scale.”
Here is the text of the bill’s unemployment section, which can be found in Title VII of the bill, “For an additional amount for ‘State Unemployment Insurance and Employment Service Operations’ for grants to States in accordance with section 6 of the Wagner-Peyser Act, $400,000,000, which may be expended from the Employment Security Administration Account in the Unemployment Trust Fund, and which shall be available for obligation on the date of enactment of this Act: Provided, That such funds shall remain available to the States through September 30, 2010.”
First off, someone needs to tell Gov. Jindal that the word permanent does not appear in the text. The question is where are Republicans getting the lie that this is a permanent tax increase? The answer can be found in Section VI of the Wagner-Peyser Act, which says, “No State’s allotment under this section for any fiscal year shall be less that 90 percent of its allotment percentage for the fiscal year preceding the fiscal year for which the determination is made.”
Jindal and the others are making a very faulty assumption here. They are assuming that the unemployment rate will stay high in 2010, and they also make the assumption that the federal government will not provide any additional funding. Their first assumption is possible, but the second won’t happen. It would be unprecedented for the federal government to cut funding while unemployment is high. No matter what party is in control, this doesn’t happen.
What is really going on here is that these governors are willing to put their own political ambitions ahead of the needs of the people of their state. All three of these gentlemen want to run for the Republican nomination in 2012, and they think that they will endear themselves to the GOP base by taking a hard line against the stimulus. If this means twisting the truth and hurting the unemployed in their states, so be it. Their position is based on cold political calculus, which may benefit them with Republicans, but would destroy them if any one of them were lucky enough to become the GOP nominee.