The truth about NC’s unemployment insurance system


By Rob Schofield - NC Policy Watch



In addition to generating a steady stream of “alternative facts” about the world around us, the modern Right has also become extremely adept in recent years at manufacturing what one might charitably characterize as “alternative history.” See, for example, the repeated efforts of North Carolina Republicans to criticize Democrats and former Governor, Beverly Perdue, for the state education cuts that actually resulted from George W. Bush’s Great Recession.

At times, the misleading statements were so numerous and outrageous as to be truly absurd — especially in recent years as conservatives sought to take “credit” for restoring funding pared during the Recession. The truth, of course, was that the education funding cuts of the early Perdue years: a) were the result of a national economic collapse spurred by Bush’s casino capitalism policies that caused North Carolina revenues to plunge and b) would have been a hell of a lot worse had Perdue not taken steps to stop the GOP’s demands for more and bigger tax cuts. The supposed restoration of funding has never made North Carolina schools whole or returned them to where they were pre-recession.

Now the GOP’s special brand of revisionist history is being applied to the issue of unemployment insurance. According to various politicians and spokespeople, Republican policies over the past few years have “rescued” a system that was all but driven into bankruptcy by Democrats. Senate President Pro Tem Phil Berger once again pushed this disingenuous line Monday night in his response to the Governor’s State of the State speech. Like the tale about education funding, this is pure hogwash.

Here is the actual truth: North Carolina’s unemployment insurance trust fund did, in fact, get emptied out during the Great Recession. Calamitous, once-in-a-half-century economic crises that send unemployment into the double digits will do that. This is especially true when the fund is smaller than it should be — as it was prior to the Great Recession. The reason for this: incessant demands from Republicans and some conservative Democrats to slash unemployment taxes on profitable businesses — even when times were very good. In fact, at the onset of the Great Recession, the tax rate on a large percentage of North Carolina employers was 0%. That’s right: nada, zilch. They were paying no taxes at all. That seemed fine, of course, until the recession hit and quickly emptied the fund.

Now, fast forward to 2013 and the year the GOP gained control of all parts of North Carolina government. How did they “fix” the U.I. system? Not by restoring reasonable tax rates to rebuild the fund, that’s for sure. They “fixed” things by utterly devastating benefits and eligibility rules.

The result: What once had been a middle-of-the-pack system, nationally, with respect to benefits and eligibility, quickly plunged to last in the nation. Today, so few deserving North Carolinians receive U.I. and for such a short period, that the system has become a virtual joke. Essentially every other state in the nation now does better by its unemployed workers than North Carolina.

In other words, the story of the GOP “fix” for unemployment insurance is a big lie and no different than the notion of, say, “solving” the nation’s healthcare problems by closing hospitals and ending health insurance for people in need.

Sound familiar?

Rob Schofield is the director of research at NC Policy Watch. He has three decades of experience as a lawyer, lobbyist, writer, commentator and trainer.

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By Rob Schofield

NC Policy Watch

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