Monday, June 16, 2008

Why Do Bachmann and Kline Oppose Using the FUT Reserve ?

It’s the economy, stupid !

This election season, that old mantra is being spoken by the voters but some of our politicians do not hear it.

Foreclosures, Gas Prices, Food Prices, Health Care Costs … their all going UP … but what is going DOWN is also a concern – employment.

The Department of Labor reported last week that the advance number for seasonally adjusted insured unemployment during the week ending May 31 was 3,139,000 versus 2,500,000 for the same period one year ago.

That’s a lot of families.
If they are out of work, the impact is on all of us. More foreclosures potentially putting property tax payments in arrears. There is a strain on food shelves and health care systems. Financial strains can lead to emotional strains.

Long ago, Congress set up a system to address this. If a worker is terminated, unemployment benefits may be available for a certain period of time. Once the benefits are exercised, you’re on your own.

Considering the current unemployment level and uneasy economic environment, Congress debated extending the benefit period by thirteen weeks.
Last week, the House voted twice on HR 5749 – Emergency Extended Unemployment Compensation Act of 2008. The final vote Roll Call 403 passed with sufficient number of Republicans and Democrats to override a veto if one was used. Voting in favor of this legislation was Republican Jim Ramstad (MN-03) and all Democrats … voting against this were Republicans Michelle Bachmann (MN-06) and John Kline (MN-02).

As a fiscal conservative, my first question is how will this benefit be paid ?
I opposed the Economic Stimulus prebate as it was paid by adding to the national debt … however I note that Bachmann and Kline supported that legislation. In a press release, Kline stated “The best way to move our economy forward is to allow Minnesotans to keep more of what they earn and to spend on what is important to their families.” So to Kline, the message is to spend today regardless of that the future generations will have to pay.

In this instance funding for unemployment benefits will not be an add-on to the national debt.
Because the Federal Unemployment Tax Trust Fund is currently overfunded at $35 billion dollars. Extending the unemployment benefits would cost $12 billion dollars over 10 years. FYI : A FUT payment is made by your employer based on the first $7000 of wages with most employers paying $42 per employee per year. In fact, as those workers become employed, the FUT Trust Fund will be repaid.

Extending unemployment benefits has the potential to help the entire American economy. According to the Congressional Budget Office, it is one of the most cost-effective and fast-acting ways to stimulate the economy because the money is spent quickly. For every $1 spent on unemployment benefits generates $1.64 in new economic demand.

This makes so much sense, so why would Bachmann and Kline be opposed to it?

The only reason that makes sense to me is that they realize that if they take money from the FUT Trust Fund to pay for what it was intended (Unemployment Benefits), then they cannot use those monies to help offset other spending. This is the same problem as when Congress borrows from the Social Security Trust Fund.

If Kline is truly concerned about getting our economy moving and creating more jobs, the extending the unemployment benefits using the overfunded reserve will do that.

This legislation will go the Senate next and then on to the President. Since Bush may veto this, please contact the offices of Congresswoman Bachmann and Congressman Kline to express your concerns.

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