The Obfuscation Report

February 7th, 2009 1:16 pm
7 U.S. states borrowing to pay jobless benefits

NEW YORK, Feb 6 (Reuters) - Seven U.S. states have been forced to borrow from the federal government to cover the rising cost of unemployment benefits, the National Conference of State Legislatures said on Friday.

Michigan already owes the government more than $1 billion, the bipartisan organization said in a statement.

The other states that have been forced to borrow are California, Ohio, New York, South Carolina, Indiana and Kentucky.

"Kentucky is in dire straits," said Brent Yonts, chair of the NCSL Labor and Economic Development Committee and representative for Kentucky.

"We've got to look at the whole system because the whole system is collapsing, just like everything else."

Kentucky's jobless rate stands at 7.8 percent, above the national average of 7.6 percent released in a government report earlier Friday.

Fourteen states have jobless rates that exceed 7.6 percent, with Michigan, Rhode Island and Puerto Rico showing rates higher than 10 percent.

"No one anticipated this type of increase that would put such a strain on state unemployment systems," said Diana Hinton Noel, a labor analyst for the NCSL.

States pay for jobless benefits by levying payroll taxes on employers. These are deposited into the federal Unemployment Trust Fund, which keeps separate accounts for each state, plus the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

Individual state accounts are fast dwindling as job losses shrink payroll tax revenue.

The Department of Labor earlier reported that 598,000 jobs were lost in January. More than 3.5 million jobs were lost in 2008 and more than 11 million Americans are unemployed.

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By Alec MacGillis and Perry Bacon Jr.
Washington Post Staff Writers
Monday, February 9, 2009; A01

Three months after their Election Day drubbing, Republican leaders see glimmers of rebirth in the party's liberation from an unpopular president, its selection of its first African American chairman and, most of all, its stand against a stimulus package that they are increasingly confident will provide little economic jolt but will pay off politically for those who oppose it.

After giving the package zero votes in the House, and with their counterparts in the Senate likely to provide in a crucial procedural vote today only the handful of votes needed to avoid a filibuster, Republicans are relishing the opportunity to make a big statement. Rep. Pete Sessions (R-Tex.) suggested last week that the party is learning from the disruptive tactics of the Taliban, and the GOP these days does have the bravado of an insurgent band that has pulled together after a big defeat to carry off a quick, if not particularly damaging, raid on the powers that be.

"We're so far ahead of where we thought we'd be at this time," said Rep. Paul D. Ryan (R-Wis.), one of several younger congressmen seeking to lead the party's renewal. "It's not a sign that we're back to where we need to be, but it's a sign that we're beginning to find our voice. We're standing on our core principles, and the core principle that suffered the most in recent years was fiscal conservatism and economic liberty. That was the tallest pole in our tent, and we took an ax to it, but now we're building it back."

The second-ranking House Republican, Rep. Eric Cantor (Va.), put it more bluntly. "What transpired . . . and will give us a shot in the arm going forward is that we are standing up on principle and just saying no," he said.

The fact that the stimulus legislation keeps moving forward nonetheless has done nothing to dim Republicans' satisfaction. Rather, they sense a tactical victory, particularly in the framing of their opposition to the plan as a clash with congressional Democrats instead of with President Obama, who remains far more popular with voters than does Congress.

Republicans are holding congressional Democrats responsible for the wasteful spending they say is in the stimulus package, even though most of the big-ticket items -- for renewable energy, health care and schools -- are ones that Obama wanted in the package to advance his long-term goals.

For a while, the president did not exactly resist this tack, leaving the impression that the bill is mainly a congressional creation, but he started to defend it more vigorously last week. It is a triangulation of sorts, with Republicans hoping to drive a wedge between congressional Democrats and Obama.

"The president has done a good job reaching out to Republicans, and he has said he wants to approach this crisis . . . on a bipartisan basis. That's good, and we're willing to work with him on that. But this bill is not the president's bipartisan plan," Sen. John Cornyn (R-Tex.) said yesterday on "Fox News Sunday."

Tom Davis, who retired from his Northern Virginia congressional seat last month, has long warned about the party's decline among moderate suburban voters. But with George W. Bush now off the national stage, Davis is upbeat about the party's prospects in its initial tests: the House seat in Upstate New York that had been held by Sen. Kirsten Gillibrand (D), and Virginia's gubernatorial race.

"There was such antipathy to Bush, and you take him out of it and a lot of the Democrats' energy evaporates. It doesn't change the poll numbers, but it changes the energy," he said. "That's why these elections are going to be different."

The flash of triumphalism -- fueled further by schadenfreude over the tax troubles of some of Obama's Cabinet nominees -- is not without risk. Voters hungering for a response to hard times may see the GOP's battle against the stimulus package as unsympathetic to their plight. And Obama may decide it is not worth reaching out to Republicans on future legislation.

The party is also likely to be less unified on the final vote on the stimulus package. Rep. Michael N. Castle (Del.), one of a dwindling number of moderate Republicans in the House, said he hopes the bill will improve enough in its final version so he can vote yes.

"I'm always concerned when the Republican Party takes a negative position on something that should be moving forward," he said. "I believe there could be a good stimulus package, and hopefully we've created enough doubt that they'll work it out in the Senate."

Democrats scoff at the Republicans' claim to regrouping, saying the declarations against big spending are undermined by the deficits that were run up under Bush and GOP congressional leadership. The stand against the stimulus appeared to be more rejectionist than the discovery of a new approach for moving forward, they said.

"That 'no' vote was a very tentative first move, and it remains to be seen what level of engagement and cooperation they're going to give the president," said Joel Johnson, who served as a policy adviser to President Bill Clinton. "It is much easier, when you're not sure what your strategy is, to revert to a 'no' strategy, and that's what they did."

The Republicans' bravado comes amid another sign of the depth of the party's plight: Data from Gallup show that the Democrats' edge in party identification is larger than it has been since 1983. The GOP's 178 House members, concentrated in the South, are its lowest total since 1993; it is clinging to the 41 Senate seats it needs to uphold a filibuster; it holds 21 governorships and has lost clout in state legislatures.

The solidarity against the stimulus package also glosses over a divide over comeback strategy. Many Republicans see this moment as equivalent to 1993, when the party handled a new Democratic president by resisting and capitalizing on any perceived overreach.

The party, these Republicans say, need only hold true to its small-government principles for a center-right electorate to gravitate back. That means rejecting the stimulus package and offering in its place an alternative package centered mostly on tax cuts, as House Republicans did last week.

It also means focusing the stimulus critique on relatively small slivers of the package that echo old culture wars, such as spending for contraceptives and for the National Endowment for the Arts. And it means rallying to Rush Limbaugh, who has put himself forward as a de facto party leader, penning an op-ed article in the Wall Street Journal and accepting the on-air apologies of Rep. Phil Gingrey (R-Ga.), who criticized the radio host and paid for it in a deluge of angry calls.

"If you get the principles right in the first place . . . the politics will take care of itself," said Rep. Jeb Hensarling (R-Tex.), a leader of the new conservative vanguard. "It comes down to basic principles -- who's better at preserving jobs, small business or the government? If you think it's small business, look to the Republicans."

Curly Haugland, a Republican National Committee member from North Dakota, said there is little need for ideas when the main task for the GOP will be fighting back Democratic ones. "We're going to have plenty to do just playing defense," he said. "These people [the Democrats] are going to be aggressively on the march."

Others argue that the past two elections represented a more fundamental turn against Reaganite assumptions that dominated for nearly three decades, and that the party has to develop an agenda that goes beyond tax-cutting to lay out a vision for government that, while smaller than what Democrats want, is active in its own right.

"They're talking too much about opposing," Florida GOP Chairman Jim Greer said of the House Republicans. "They're talking too much about voting 'no' and not about how they're going to solve these issues. I'm proud the party took a stand on principles, but I also want to hear about how the Republican Party leaders intend to solve problems."

Mitt Romney, the former Massachusetts governor and presidential candidate, praised House leaders at their recent retreat in Hot Springs, Va., for their opposition to the stimulus, but he also urged them to present a health-care plan before the Democrats did.

The need to move forward was an argument for selecting Michael S. Steele as Republican National Committee chairman. The former Maryland lieutenant governor has good relations with more moderate members of the party, hails from the suburbs in a blue state, and puts a more diverse face on a party that has not had a single African American governor or member of Congress in six years, and is also lagging badly with Hispanic voters.

In his initial statements as party leader, however, Steele has stuck to tried-and-true themes, including invoking the GOP's 1994 victory as a model and praising House leaders for their stimulus vote. "The goose egg that you laid on the president's desk was just beautiful," he told them. "You and I know that in the history of mankind and womankind, government -- federal, state or local -- has never created one job. It's destroyed a lot of them."

Steele is also facing a distraction -- a federal inquiry into allegations that his 2006 Senate campaign paid a defunct company run by his sister for services that were never performed. The campaign's finance chairman made the allegations to federal prosecutors last year as he sought leniency during plea negotiations on unrelated fraud charges.

For now, the big question facing the Republican Party is how voters will perceive its stand against the stimulus package, a judgment that is likely to depend on how the package is perceived months from now. Republicans dismiss any worry that, in their rejection, they will be seen by voters as indirectly running against an economic recovery.

Given how small their numbers are, they noted, it will be difficult for them to actually block the bill. And their own constituents, they said, are becoming increasingly critical of the package.

"This thing is a dog and it doesn't hunt," Ryan said. "Everyone thinks Washington is just going back to pork-barrel spending. You can't walk down the street in Janesville, Wisconsin, without someone trashing it."

# posted by The Punisher @ Monday, February 09, 2009