Wednesday, July 21, 2010

Unemployment and the Welfare State

For a bright moment, Congress decided to take unemployment back to it's roots and stop extending benefits indefinitely. It sounds uncaring to say that unemployment needs to remain a finite benefit of the formerly employed, but let's think this over. Unemployment insurance is paid by employers based on people that are working and paying taxes. When those folks are no longer working they, through their employer, have paid into the system and it pays them back. The time frame is finite and meant to encourage folks to seek employment of some type and pay back into the system again. When there are more people drawing unemployment than is paid into it, the states go into debt with the federal government for the difference. When this happens, the companies in that state pay more unemployment tax to the federal government and it goes up every year until the state pays the debt and is in the black. The only way the state can pay the debt and get in the black is if the unemployment rate falls low enough to have enough people paying in to offset those getting paid plus make payments on the debt. In the State of Michigan, this is not likely to occur for at least 6 years. Therefore, employers in this state will be paying 2.6% to the feds on a bill that is normally .8%, in addition to state unemployment insurance. What a great way to attract new employers (read sarcasm). In the meantime, the folks that are working are paying 2 and 1/2 times over and above the lovely unemployment taxes already levied into general taxes diverted to pay additional unemployment. Since our government wants to spend our taxes to support the long-term unemployed, why aren't they on Welfare? There is already a government program funded by our taxes for this purpose. Since we never got rid of that program after the Great Depression, let's quit using programs for things they weren't intended to do and get back to the process of helping people work. Many generations of well intentioned politicians and bureaucrats have created programs to help people that ended up being long term tax burdens on the general populace. Each program was meant to end and no one had the guts to pull the trigger on them. Now, once again, Congress is unable or unwilling to cut off the program we are misusing to create a false sense of security. Could someone in D.C. please take the same amount of time focusing on encouraging business growth that they spend on debating extending unemployment? We would all rather see America working than waiting in suspense for the approval to get their next handout.

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