Saying that it could lead to a tax increase on state businesses, Gov. Bobby Jindal announced Friday that the state plans to reject as much as $98 million in federal unemployment assistance in the economic stimulus package.
Rather that go off on what at first glance appears to be a knne-jerk GOP preference for business owners over the average working class family down on their luck, let’s pull what might appear to be Jindal’s reasons for this stance:
Jindal, who has emerged as a leading Republican critic of the $787 billion spending and tax-cut bill signed into law this week by President Barack Obama, said the state would accept federal dollars for transportation projects and would not quarrel with a $25-per-week increase in unemployment benefits. Both of those items are financed entirely with federal dollars and require the state only to accept the money. The part that Jindal rejected would require permanent changes in state law that the governor said makes it unacceptable. "You're talking about temporary federal spending triggering a permanent change in state law," Jindal said ... At issue are two pots of federal money that states can access only if they agree to change their laws to make it easier for unemployed workers to qualify for benefits. To access the first pot of money, worth $32.8 million over 27 months, Louisiana would have to offer benefits to workers who have held jobs for as little as three months before becoming unemployed. Workers now have to hold a job for at least a year before they are eligible to collect unemployment. The Louisiana Workforce Commission, which administers the state's unemployment insurance system, estimates that an additional 4,000 former workers would become eligible for benefits under that change. A second pot of money, valued at $65.6 million, would be available to Louisiana only if it agreed to other, larger expansions of benefits. For example, the state could extend benefits to part-time workers or change the law so that people could collect unemployment if they voluntarily left their job for "compelling" family reasons. As the Jindal administration interprets the law, Louisiana would be required to keep providing the expanded benefits even after the federal stimulus dollars run out at the end of 2010. That, in turn, would lead to higher costs on businesses, whose taxes finance the state's unemployment compensation fund. According to the Workforce Commission, the expanded benefits would cost Louisiana companies $12 million a year after the federal money ends. The businesses, in turn, would pass those costs on to their workers. “I don't think it's good policy to take temporary federal dollars to create a permanent state spending obligation,” Jindal said.
Senator Landrieu has another view:
But U.S. Sen. Mary Landrieu, D-La., disputed the governor's interpretation and said the new unemployment benefits are designed to be temporary. "This bill is an emergency measure designed to provide extra help during these extraordinarily tough times, " Landrieu said. "To characterize this provision as a 'tax increase on Louisiana businesses' is inaccurate." … A senior aide to Landrieu agreed that the state would have to change the law to take advantage of the windfall but said the change would not have to be permanent. Instead, the Legislature could write the new law with a "sunset provision" so it expires when the federal stimulus dollars run out.
Republicans should understand sunset provisions – it’s how they claimed that the 2001 tax cuts would not permanently drive up the deficit. The governor of Louisiana is turning down almost $100 million in federal unemployment assistance becomes he cannot think out of the box? Isn’t this complete incompetence grounds for his removal from public office?
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