Unemployment insurance, the stimulus, and Gov. Perry

Posted in 2010 Primary, 81st Legislature, Around The State, Bad Government Republicans, Commentary, Election 2010, Right Wing Lies, The Economy, Unemployment at 9:19 am by wcnews

Whether Gov. Rick Perry’s opposition to accepting the unemployment insurance (UI) portion of the stimulus will come back to haunt him, in either one of the possible two elections he could potentially face by November 2010, is mostly up to his opponents and how the Texas economy fares during that time.

There are several ways that Perry’s opposition to the UI money is often spoken of that must be put straight. First, the the bailout and the stimulus are two separate things. As far as the bailout goes, both Texas Senators, Kay Bailey Hutchison and John Cornyn, voted for it, and it occurred while Bush the younger was still President. The stimulus, of which the unemployment insurance that Gov. Perry rejected was part of, was passed after Barack Obama became president. So when Gov. Perry speaks of a “bailout mentality”, he’s using weasel words if he’s applying that to the UI money, which came from the stimulus and not the bailout. That’s stimulus money which was meant to help the unemployed survive the recession, pay their mortgage, car payment, etc.., while not overburdening business with an extremely high tax increase to cover the unemployed, until the economy picked back up.

Another part of this is that Rick Perry accepted, gladly, all the but a tiny portion of the stimulus, other than the unemployment insurance. Which has allowed him and his GOP cohorts in the lege to claim they were able to balance the budget without tapping the into the rainy day fund. This comment regarding an earlier EOW post says it perfectly.

I believe Gov. Perry accepted approx. $16.5 billion of the $17 billion offered from the Federal Stimulus package for political reasons rather than a legitimate financial reason. This allows him to go around to his base saying he rejected the stimulus package when in reality he accepted all but a fraction of it (1/34th). These are tough times for everyone but especially tough for the unemployed and workers that have had to lose hours.

And for the governor to go around saying this is downright ludicrous:

Despite the loan, Gov. Perry defended his decision to those who questioned it.

“They are shortsighted and probably criticizing for a political reason rather than a legitimate financial reason,” Gov. Perry said.

Sure, because there was ABSOLUTELY NOTHING POLITICAL about the rejection of the unemployment stimulus funds in the first place. Why can’t Governor Perry’s critics understand that? He was just operating in Texas’ best interests, politics be damned!

Yes his “principled” stand - that will hurt working Texans, city and county economies, and cause massive tax increases on Texas businesses soon - we’re supposed to believe had nothing to do with his upcoming election(s). There’s a great column from Mithcell Schnurman in the FWST on what should be done, Texas leaders should reconsider the federal stimulus money.

At what point does the real world trump politics and principle?

Texas is shaping up as a test case, because more than 23,000 workers are losing their jobs every week and $556 million in federal aid is sitting on the table, unclaimed.

Texas is one of only four states — the others are Alabama, Florida and Virginia — that rejected federal stimulus dollars connected with reforming unemployment insurance. Thirty-six states qualify for the federal money, including more than two dozen that adopted reforms this year, and the rest are still debating the issue.

States have until 2011 to make the changes and apply for the money.

Months ago, Gov. Rick Perry was quick to denounce the stimulus offer and criticize Washington’s “bailout mentality.” He said the feds were trying to dictate state policy by forcing changes that would hurt employers and job growth.

The reforms would expand coverage by making more people (primarily low-wage earners) eligible for benefits. It would add about 2.5 percent to the state’s annual payout for unemployment benefits, so there’s no threat of Texas becoming a welfare haven.

The state already ranks dead last in participation rate, with just 24 percent of unemployed workers getting benefits, compared with a national average of 41 percent.


In February, when the trust fund still had a billion-dollar balance, the projected deficit was half the size. Texas’ economy was still holding up well, and its unemployment rate was 6.5 percent. On Friday, the state reported a seasonally adjusted jobless rate of 7.5 percent for June, with unemployment claims rising 45 percent in the week ended July 4.

The trends show how the downturn has accelerated in Texas, but some lawmakers have been sounding the alarm about unemployment funding for months. The state Senate approved a bill to enact reforms in the recent Legislature, but it died in the House.

On Friday, Sen. Wendy Davis, D-Fort Worth, and Sen. Rodney Ellis, D-Houston, sent a letter to Perry, urging him to call a special session to enact the unemployment reforms that would let Texas draw the federal dollars.

They said that 250,000 jobs had been lost since the beginning of the year, that sales tax collections had plummeted and that the comptroller had tripled her prediction for job losses in the state in 2009.

“Reality has demonstrated that refusing half a billion dollars in federal stimulus money was not the right policy for Texas,” the letter said.

Reforming unemployment insurance would help struggling families in Texas and reduce the impact on small businesses, they said.

The money would also stimulate the state economy. Unemployment benefits are generally spent quickly, and they have a 2-to-1 multiplier effect. By contrast, tax cuts are often saved or used to pay down debt.


All eligible Texans will continue to get unemployment benefits, regardless of the state’s stance on the stimulus. But an estimated 45,000 residents would have been added if new rules were adopted.

The local economy would get a boost, too.

That’s a lot to give up, at a time when Texas needs the help.

While a special session to help working Texans, city and county economies, and Texas businesses seems like a valid emergency, and reason for a special session to many. It’s not likely to be an emergency to Gov. Perry and his reelection campaign. Jason Embry has this on the political implications for the governor, Unemployment insurance a two-sided political issue for Perry.

Gov. Rick Perry’s opposition to federal stimulus dollars for unemployment benefits earlier this year boosted his standing among many Republicans. But other issues surrounding the state’s unemployment program could create political headaches for Perry in the next year and a half.

With unemployment rising, the state will have to borrow more than $643 million from the federal government in the coming months to keep paying benefits, even though that money will come interest-free for 18 months. And the Texas Workforce Commission is planning to ask employers to pay more in taxes to repay that money and keep the unemployment trust fund healthy.


“That deficit, and future taxes on Texas employers, would have been lower if Gov. Perry hadn’t rejected $555 million in federal unemployment stimulus funds earlier this year,” said Democratic gubernatorial candidate Tom Schieffer.

Perry’s UI decision isn’t likely to hurt him much, if at all, in the GOP Primary. Since it hurts the most needy the most, and Hutchison isn’t likely to say much in their defense. It would be much better to see a full throated shaming of Perry by the lifelong Democrat Tom Schieffer when he talks to the press, on this issue in particular, that’s for sure. Something more like this, Sen. Watson explains Gov. Perry’s huge mistake.

And of course the irony of ironies, Secessionist Gov. Rick Perry now seeking federal stimulus funds. Kuff has more on the latest unemployment games being played by Perry and former Texas GOP chair turned head of the Texas Workforce Commission Tom Pauken.

When anyone says Perry turned down the stimulus the correct response is that not he didn’t. He turned down a very tiny portion of it and gladly took almost of it, all but 1/34th of it. And the portion he did turn down will hurt the neediest of Texans the most. And if he says he’s against a bailout mentality, let him know that he only has his party to blame for that. If Texas is to be rid of Gov. Perry, those running against him must point these things out, early and often.


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