DawgTalkers.net Forums DawgTalk Tailgate Forum Republicans Thwart Bill With Unemployment Aid, "AGAIN"

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Unemployment Reserve Fund Ended 2009 with Record $896 Million Deficit
Future Tax Increases and Benefit Cuts Likely as Federal Borrowing Continues

April 14, 2010

MADISON— Wisconsin’s Unemployment Reserve Fund has declined each year since 2000, and it ended 2009 with a negative balance of $896 million. The Reserve Fund deficit could reach $2.4 billion by 2011, according to a new study from the Wisconsin Taxpayers Alliance (WISTAX). The study, "Wisconsin’s Unemployment Reserve Fund," explains Wisconsin’s reserve losses over the past decade, and compares those losses and the state’s current federal borrowing with other states. Now in its 79th year, WISTAX is a nonprofit, nonpartisan organization devoted to public policy research and citizen education.

From 2000 through 2009, Wisconsin’s Reserve Fund declined $2.7 billion, from $1.8 billion to -$896 million. The 148.8% drop was the 14th-largest decline nationally. New York, Texas, and North Carolina recorded the largest losses. The imbalance opened because during 2000-09, Wisconsin benefit payments increased 284.8%, while tax collections grew only 55.8%. The gap was even larger in the past year: Wisconsin benefits paid increased 95.9%, while taxes collected increased 9.6%. Wisconsin Department of Workforce Development (DWD) projections now show the state ending 2010 with a reserve balance of -$1.9 billion.

Although rising unemployment during the most recent and the prior recession placed considerable strain on the fund, reserves declined even in years when Wisconsin’s economy was strong, reflecting underlying solvency issues with the program, WISTAX said. One of those issues was the taxable wage base. From 1986 to 2008, the wage base remained unchanged. As a result, tax collections increased only if tax rates were raised or the workforce grew. However, because employment did not grow at typical postrecession rates after 2001, tax collections grew slowly and lagged annual benefit payments. In addition, technical changes in how benefit charges were assigned to employers adversely affected revenues.

In February 2009, Wisconsin began borrowing from the federal government to fund unemployment benefits. This was the second time in state history it resorted to federal borrowing. The other occurred in the 1980s when it borrowed a total of $988 million. In inflation-adjusted dollars, that would be about $2.1 billion today. As of March 18, 2010, Wisconsin had outstanding federal loans totalling $1.27 billion. According to DWD, borrowing could exceed $2 billion by 2012.

The state’s federal loan balance was 12th highest nationally. As a share of 2009 unemployment tax collections, loans here were 185.4% of taxes—seventh highest nationally. Thirty-one states had outstanding loans with the federal government, ranging from $8.1 billion in California to $16.3 million in Vermont. Loans

totalled $36.7 billion, with a median (half higher, half lower) of $437.8 million. About 40 states are expected to borrow from the federal loan pool by 2012, with total loan amounts possibly reaching $90 billion.

Manufacturing states were hardest hit by the economic recession and rising unemployment. Of the seven states with the highest federal loans relative to taxes, each was in the top 13 manufacturing states nationally.

According to WISTAX, the last time the Unemployment Reserve Fund significantly declined was during the early 1980s recession. To bring the Reserve Fund back to solvency, taxes were increased and benefits cut. Similar changes will be necessary in the coming years, according to DWD officials. However, unlike the early 1980s, when Wisconsin’s unemployment taxes and benefits were favorable compared to most states, the state now has the 14th-highest taxes and 29th most generous benefits nationally, leaving less room for tax hikes or benefit cuts.

Wisconsin has taken steps to strengthen the Reserve Fund. In 2009, the first $12,000 of an employee’s wages were subject to unemployment taxes, up from $10,500 in 2008. That amount is scheduled to increase to $13,000 in 2011 and $14,000 in 2013. DWD expects each scheduled increase to generate about $60 million in the first year and $20 million annually thereafter. In 2010, employers also began using the highest of the four tax tables, Schedule A, which will generate an additional $90 million in 2010. Benefit eligibility requirements have also been made more stringent for the unemployed.

In addition to tax increases passed in prior years, the state will need new revenues to repay federal loans and their interest, since interest payments cannot be made from the Reserve Fund. In the past, a special assessment on employers was imposed for this purpose.

http://www.wistax.org/news_releases/2010/1003.html

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Of course, those whining about the inhumanity of it all fail to utter even the slightest whisper about how Harry Reid said that the bill will NOT be considered as a stand alone measure.

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You tell me...do we have an unemployment problem? In 2001 it soared to 4.9%, May was 9.7%. I guess it could be just tons of lazy people and open jobs...

But it sounds like more people are not finding jobs to me, which sounds like less consumers. But feel free to explain the differences.

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Well you could create customers by employing them

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.do all these unemployed people magically conjure money to buy things from these poor companies?

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The CEO can buy a bunch of stuff from his company!! I mean his salary went from 1 million to 20 million with bonuses

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Let's take a computer company. Now to make a pretty profit we are going to cut 2% of the employees and send those jobs overseas for peanuts. Now no matter how many employees that 2% is that is still less people able to purchase a computer.

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So the computer company sells less computers which means it needs to cut more jobs...

Now is your 'best CEO possible' going to be in that scenario...because that doesn't sound like a great business model.

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DC...in short, unemployment is funded by the company you work for. Companies pay in according to a formula and each state has their own formula.

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As noted earlier, 3 states have co-pay systems that require workers to contribution to the unemployment insurance funds..Alaska is one of those states, don't know the other two but it is a trend that will likely spread as unemployment insurance funds need more funding due to this historic recession.

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The solution would be to have more people employed,

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Of course that is the solution but what people are struggling with here is how you propose to do that.

It appears to me (and others) that your solution is to say.. "Ok, Mr. CEO making $10 million bonuses, you need to forego your bonus so you can retain 150 employees, that you don't need, and pay them $75K a year to stand around and do nothing so they can have spending money and buy products from other companies because that will help the economy."

Thanks to everyone for the discussion, it's civil and appreciated! Hope I am staying that well as well.

DC I think part of the issue is that the CEO had to cut jobs to keep the company going...but took a huge bonus that is many many many times larger than his salary. It's like coming home to find out your babysitter lost your child and she just asks for a ride home and her pay.

Everyone is approaching this from the "Revenue is down so they have to cut jobs" aspect...the question is when did the recession start and when did the jobs start leaving. I think companies are seeing less because they have sent jobs overseas and those jobs are not being replaced here. The one article linked earlier about problems with all the jobs going overseas is almost 10 years old...




Am I close?

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So the computer company sells less computers which means it needs to cut more jobs...

Now is your 'best CEO possible' going to be in that scenario...because that doesn't sound like a great business model.

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Could not have said it better. Gees if after working for the the last 34 years and I knew that the government would give me unemployment benefits for as long as I need it I would ask for a layoff tomorrow!

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Could not have said it better. Gees if after working for the the last 34 years and I knew that the government would give me unemployment benefits for as long as I need it I would ask for a layoff tomorrow!

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The problem with that is you have no retirement fund building up 'living off unemployment'. I'm not sure how people can enjoy living off a fraction of their income to be honest...maybe that's why I don't get everyone saying that 'everyone is doing it'.

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How do you know you will live long enough to retire?

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Reid contended all but $35 billion for jobless benefits had been offset by cuts elsewhere and by new taxes on multinational corporations.

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Republicans Block Unemployment Extension....Again

It might sound like Deja-Vu to America's unemployed. But once again, Senate Republicans have blocked efforts to pass an extension of filing dates for unemployment benefits.

On Wednesday, Senate Republicans sustained a filibuster on the unemployment measure, as the extension fell short of the 60-vote supermajority needed to overcome it. The vote was 58-38.

Two Republicans--Maine Sens. Susan Collins and Olympia Snowe--joined Democrats in voting for the jobless benefits. Sen. Ben Nelson of Nebraska was the lone Democrat to vote against it. The recent death of Sen. Robert Byrd (D, WV) also had an impact on the final vote, since he was expected to be the 60th vote in favor of the measure.

Senate Majority Leader Harry Reid (D-Nev.) had to vote 'no' to allow for another vote, so technically, Democrats were one vote shy of passing the measure that has gone through four changes and failed to pass three times in the past three weeks. Reid said he expected the measure would pass once Sen. Byrd's replacement has been named and the Senate returns on July 12th.

By the time Congress returns, more than 2 million people who have been out of work for six months or longer will have lost their extended benefits, up to 99 weeks in some states with high unemployment, according to the Labor Department.

This was the latest of several failed attempts by Democrats to extend the jobless benefits, which expired at the end of May. Nelson and most Senate Republicans have criticized the bill because it does not include spending cuts elsewhere in the budget to offset its $34 billion cost. Supporters of the plan have argued that past unemployment bills have not been required to be paid for in advance, since they are considered an "emergency" bill.

Democrats objected to a motion from Senate Minority Leader Mitch McConnell ( R., Ky.) that would have extended the unemployment aid for six months, while offsetting its cost by re-directing unspent stimulus funds. Democrats argued that since unemployment benefits have a stimulus effect on the economy, using stimulus funds to pay for the benefits would be economically counter-productive.

Left out of both sides of this political argument are the more than one million Americans who have already exhausted their unemployment benefits. These unemployed were hoping for a so-called "Tier 5" of additional benefits. Despite the number of economists who argue the additional benefits are needed, neither party has been inclined to battle for the idea.

For more coverage of the plight of the long-term unemployed and the media's coverage of the story, visit

LINK

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With the Senate apparently paralyzed by partisan gridlock, the fate of the aid, as well as tax breaks for businesses and $16 billion in aid for cash-strapped states, remains unclear. California and dozens of other states are hoping for federal aid to help balance their budgets.

Republican lawmakers — joined by Democrat Ben Nelson of Nebraska — maintained a unified front to sustain a filibuster of the $110-billion bill. The vote was 57 to 41; the majority was three short of the 60 needed to cut off debate and bring the bill to a final vote.

Democrats said they would give no further ground and put the onus on Republicans to make concessions.

"If there were ever evidence that this is the party of no, this is it," said Senate Majority Leader Harry Reid (D-Nev.), who added that several governors would be arriving in Washington next week to make the case for the bill to help states, businesses and those who have been out of work more than six months.

Senate Minority Leader Mitch McConnell (R-Ky.) disputed Reid's characterization. "The only thing Republicans have opposed in this debate are job-killing taxes and adding to the national debt," he said.[/white]

The unemployment extension would add about $30 billion to the national debt. Democrats say all the provisions in the bill are offset by spending cuts and tax increases except the jobless benefits, which Congress traditionally has approved as an emergency without looking for a way to pay for them. Benefits for the long-term unemployed lapsed at the end of May because of the congressional stalemate.

In a statement, the White House vowed to keep pushing for the bill. "The president has been clear: Americans should not fall victim to Republican obstruction at a time of great economic challenge for our nation's families," Press Secretary Robert Gibbs said.

It was the third time in two weeks that Democrats failed to circumvent unified GOP opposition, despite making a series of changes to accommodate complaints about deficit spending.

http://articles.latimes.com/2010/jun/25/nation/la-na-jobless-vote-20100625 />

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So if your employer funds unemployment insurance, where do they get the money? It comes out of their profits which is reimbursed by the prices of goods.. If they didn't pay for the unemployment services they could either a) pay their workers more.. b) lower their prices or c) have more profits

In a indirect way, we are paying for the unemployment insurance.. companies are not paying for it out of their own goodness in their hearts.. they are paying for it because they have to and will need to recoup the money in some fashion.

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It's not so much this historic recession as its the gov't constant extending benefits rather than just cutting them off when they are suppose to be cut off which would force the unemployed to lower their expectations of what jobs to take.

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please explain to me why we need $109 BILLION to pay for unempoyment for 200,000 people, for 5 months.

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Because $109,000.00 a month just doesn't go as far as it used to?

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DC I think part of the issue is that the CEO had to cut jobs to keep the company going...but took a huge bonus that is many many many times larger than his salary. It's like coming home to find out your babysitter lost your child and she just asks for a ride home and her pay.

Everyone is approaching this from the "Revenue is down so they have to cut jobs" aspect...the question is when did the recession start and when did the jobs start leaving. I think companies are seeing less because they have sent jobs overseas and those jobs are not being replaced here. The one article linked earlier about problems with all the jobs going overseas is almost 10 years old...




Am I close?

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Ahem.... it doesn't cost $109 billion, it costs $34 billion. All of the pork in the bill is what takes up the remaining $75 billion.

Also, the number isn't 200,000 people. It is 200,000 people per week, apparently through November.... that's a lot of weeks.




All of that being what it is: Fund it and strip out the BS pork, or happily see it continue to fail.

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.tax cuts targeted at the most wealthy...

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Mac .... as a result of the ridiculous and wasteful Bush tax credits program, which included the obscene expansion of the Earned Income Tax Credit, we have a system today where 53% of "taxpayers" pay no taxes at all ..... and in fact get back a "refund" of money they never paid in to start with.

How much more should we "cut" from taxes on the "poor"? How much more can we cut when they pay nothing, and receive money as it stands right now?

I really do not know how you can be so incredibly mis-informed, and have opinions based on something so far from the realm of reality.

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I really do not know how you can be so incredibly mis-informed, and have opinions based on something so far from the realm of reality.

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j/c
I've never been hired by a guy on unemployment. I have been hired by business owners - some of them extremely wealthy.

Why don't we do something to stimulate job growth instead of further rewarding those that are unemployed?

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Why? Do you have a problem with 47% of the country supporting the other 53%? It's not their fault they are unemployed, and it's not fair that you have a home, TV, car, vacations, electricity, cell phone, cable, internet, and they suffer in mediocrity with just a TV, cell phone, cable and internet, and most probably have cigarettes and beer as well.

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So if your employer funds unemployment insurance, where do they get the money? It comes out of their profits which is reimbursed by the prices of goods.. If they didn't pay for the unemployment services they could either a) pay their workers more.. b) lower their prices or c) have more profits

In a indirect way, we are paying for the unemployment insurance.. companies are not paying for it out of their own goodness in their hearts.. they are paying for it because they have to and will need to recoup the money in some fashion.

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Tux...did you read the article you are referencing?

From the article...

In point of fact, the annual cost of unemployment insurance to employers is relatively low. Employers who consistently pay the state unemployment tax are eligible for an offset credit of up to 5.4 percent, independent of the tax rate they pay to the state.

According to the small business resource website, Business Owners Toolkit, the FUTA tax rate is 6.2 percent of taxable wages (wage base is the first $7,000 paid in wages to the employee during the year). After the offset credit is applied, the net FUTA tax rate is lowered to 0.8 percent for a maximum FUTA tax of $56.00 per employee on an annual basis.
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Businesses receive a tax break for the money they pay in to unemployment trust funds.

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It's not so much this historic recession as its the gov't constant extending benefits rather than just cutting them off when they are suppose to be cut off which would force the unemployed to lower their expectations of what jobs to take.

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tux...so you believe the jobs are out there?

Looking at the most recent economic information, it is obvious that the economy still has not recovered from the WORST RECESSION IN AMERICA'S HISTORY. The USA economic collapse started a global recession which further complicates the United States recovery.

To the unemployed, Republicans say "Cut them off"...

For 8 years under the leadership of GW Bush, the United States practiced GOP/Republican Economics..."trickledown economics"...tax cuts targeted at the most wealthy...with GOP argument, if we take care of the rich/business they will share their wealth by creating more jobs for the American workers.

The Bush/GOP economic plan also included a reduction in oversight and less regulation...

Today, we are living with the results of those economic policies which focused on tax cuts to stimulate the economy...approx. 1.7 trillion dollars worth of economic stimulus to combat a very mild recession in 2001 and fears of a slow down in the economy in 2003.

It seem to be so easy for some to put their foot on the head of the unemployed and simply push them under to drown...

.... But it's "so cold" of the GOP to do this after the mess they created that has lead to our high unemployment, resulting from THE WORST RECESSION IN AMERICAN HISTORY.

To those claiming there are jobs available...list them!

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