the NC unemployment Trust Fund accumulates taxes to cover UI when its needed. This is paid for by employers and employees to "cover" 26 weeks of UI.
ALL extensions after that 26 week period are passed by Congress and is paid half by the Feds and Half by the states.
In essence, the states take more out of the trust fund than they anticipated but they DO NOT PAY the Feds back for the Federal half.
Which brings me to a question.
Why the rush to pay back our own fund?
The BEST solution of course is to create the jobs necessary to replenish the fund. But I suspect that there is a group of people who support some in the legislature (and governors mansion) who want the onus of this shortfall off their back at all costs - even if it means stiffing the non-working men and women who are long term unemployed. There are NO Jobs for them - if there were we'd have to give Bev credit for creating them and we all know she didn't. The combination of trying to eliminate the corporate Tax, along with cutting off UI Benefits sounds good, but will do very little to create jobs in the short term, and it's the short term that concerns me most.
I AGREE that cutting the corporate tax is a good idea and using a sales tax INCREASE ("Another job killing tax increase") to offset it isn't all that bad so long as the taxable base is very very wide and doesn't exclude a lot of stuff. I believe that THIS will create some jobs and so long as the national unemployment picture improves, even slowly the business climate should improve rather dramatically. The problem is that the long term unemployed will NOT be able to provide any sort of demand for products these company's may make in order for the corporations to create more jobs.
So the affects of the tax cuts will be muted by a short sighted efforts to increase the bottom lines of corporations without getting John Q Public in a position to spend $ - which is what our economy is based on.
One final thought - sales taxes are not stable taxes - if people cut back on spending tax revenues suffer, AND, the upcoming sequester will cut defense spending by 7.1%, other cuts will be near 3% and Medicaid/care will be cut 2.1%. The defense cuts will cause more layoffs as will the 3% across the board cuts to other government departments.
Austerity type thinking works when the economy is humming along and the private sector can absorb the hurt of the cuts.
What we are about to find out (I believe) is that cutting back severely in government spending will hurt the economy badly- proving professor Krugman right (and that ain't good either).
But anyone who claims we have to pay back the Federal government for unemployment extensions is being disingenuous.
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