| One thing that is perfectly clear when listening to "Jersey Jindal" give his empty rhetoric and republican talking points about rejecting part of the stimulus money is that by doing so, Christie would be hurting ALL New Jersey businesses as well as many families in their time of need.
It just so happens that my specific area of expertise in my "real job" is payroll and employment tax, so when I heard Governors Bobby Jindal, Mark Sanford, Haley Barbour, Rick Perry and Governor-wannabe Chris Christie talk about rejecting part of the stimulus, I couldn't believe how short sighted and anti-business (in addition to the blatant anti-worker) that it was.
Since tax is not really the most interesting of areas, I'll boil it down to a few things. For starters, the relevant provisions of the American Recovery and Reinvestment Act of 2009 are Sections 2001 - 2004. These deal with the expansion of unemployment benefits - expansions that would be fully funded basically for 2 years if certain law changes are made. In an article discussing TX Governor Rick Perry's rejection of such funding, the criteria are laid out: To take advantage of...federal money for unemployment benefit expansions, the state would have to alter the method for calculating a worker's income, giving more weight to recent wages. Then, it would have to do at least two of the following:
- Cover part-time workers even if they search for less than full-time work.
- Extend benefits for laid-off workers who are in a retraining program.
- Cover people who quit jobs for compelling family reasons, such as domestic violence.
- Increase benefits for laid-off workers with dependents.
Now, this seems like a no-brainer as it would help more people with unemployment benefits in a time of need. And since it is fully reimbursed for the next couple of years, any additional costs wouldn't kick in for a few years, and something as simple as a surtax on families earning over $1,000,000 per year would more than cover any budget shortfall - in fact, this surtax could go directly towards offsetting the additional costs of continuing this program.
We already knew that Christie, as a loyal republican using the reliable republican playbook, doesn't care much about families and the lower to middle income workers.
But here is where the kicker lies: by rejecting these funds, he would break the backs of ALL New Jersey employers with additional taxes. As I said the other day: Put simply, if Christie would not accept money that will help with unemployment benefits, this will further deplete the unemployment fund, causing higher employer and employee unemployment tax rates, and most likely will either require New Jersey to borrow money from the Federal government, or have all New Jersey employers pay a higher Federal unemployment tax due to its depleted unemployment fund.
So how does this happen? Well, an article in the NY Times from December 2008 pointed out that NJ's unemployment reserve fund is dangerously low - meaning that it may be in a position where it needs to borrow money from the Federal Government to continue making unemployment benefit payments. New Jersey's unemployment rate in December was close to 7% - a 15 year high, and the state is 49 out of 53 when it comes to the level in the state unemployment reserve fund.
Using that as a backdrop, if NJ has to borrow money from the Federal government, that means more people are collecting unemployment benefits - and this in and of itself will drive unemployment tax rates that employers pay up for ALL employers. Additionally, if NJ has to borrow money and can't pay it back timely, then ALL New Jersey employers will have to pay an additional $42 PER EMPLOYEE for Federal Unemployment Tax (calculated at the additional 0.6% surcharge on the first $7,000 paid to each employee).
Not only would Christie crush the backs of the state's workers, but he would also cripple businesses if he were to use his partisan ideology instead of using critical thinking skills. The following would occur or is already occurring:
- More people collecting unemployment benefits from the already stunning number of job losses;
- More people needing to collect unemployment benefits (who wouldn't be able to if stimulus money was rejected) - therefore not being able to save or spend money in NJ;
- Higher state unemployment tax rates on employers from the depleted unemployment funds; and
- Higher FEDERAL unemployment taxes on ALL employers in the state if stimulus money is rejected.
This is what happens when talking points, buzzwords and blind partisanship drive policy, and when we have a candidate who clearly doesn't have a grasp on basic financial implications of their statements. |
