Here's one of those little things that come in over the transom that make you go, "Huh?", and then you realize that actually, they explain quite a lot:
OP-ED EDITORS FOR IMMEDIATE RELEASE
Friday, January 09, 2009
South Carolina Unemployment Insurance Needs Reform, Not
Bailout
By Matthew Glans
As in many other states, South Carolina’s unemployment fund is nearing
insolvency due to the growing number of unemployed. The unemployment insurance
program is in dire need of reform, and proposals have been made to raise
employer premiums or cut benefits to help bring the fund back into balance. But
these reforms are a patch job at best.
Governor Mark Sanford (R) understands a federal bailout of the state fund
will inevitably lead to a hike in businesses taxes to cover the rising cost of
unemployment insurance. Some projections predict a possible doubling of the
current tax rate. But increasing the cost of doing business in that way will
suppress economic growth and drive more businesses out of the state—thereby
increasing the burden on the unemployment fund even further.
Tax increases and government bailouts won’t address the systemic deficiencies
but instead will allow the existing problems to survive and continue to grow.
Real reform that fundamentally re-examines the state’s role in providing
unemployment benefits is what’s needed.
With its unemployment rate reaching 8.4 percent in November and payouts of
around $14 million a week depleting the unemployment fund to nothing, the state
recently requested a supplemental line of credit of $15 million from the federal
government to keep the fund afloat through the end of the year. Unemployment
officials are requesting an additional $146 million for the first quarter of
2009.
Sanford approved the request only after the Employment Security Commission
agreed to an independent audit of the program—which should have been done long
ago. The Commission initially resisted this push for increased accountability,
preferring an internal audit instead. To his credit, the governor stuck to his
guns and demanded the Commission be held accountable for its role in the
depletion of the fund.
For the past seven years, South Carolina’s unemployment fund has faced a
fiscal imbalance, with more being taken out through claims than was received
through premiums paid by employers. South Carolina’s unemployment fund has seen
a steady decline since 2001, dropping from $800 million seven years ago to being
virtually exhausted today.
Sanford is being unfairly attacked both in the media and by fellow
legislators for not blindly reaching into the government bailout trough. His
proposal to audit the Commission as a prerequisite for a federal loan is a
positive step that will provide solid evidence to encourage citizens and
legislators to support change.
Given the state’s record of poor management of the funds, privatization
through individual unemployment accounts may be the best option. Individual
unemployment accounts are a mandatory and portable individual trust to which the
employer and employee contribute. These accounts shift control and
responsibility for unemployment coverage from the employer and the state
government to the employer and the employee. They offer the flexibility and
individual choice many employees currently lack, allow individual employees more
control over their money (which follows them from job to job), and lessen the
administrative burden on the state.
Before injecting another $146 million in taxpayer dollars into an ailing
system, it’s important to know where the tax revenue is currently going, whether
adequate measures are in place to ensure applicants are moving through the
system and finding new jobs, and whether there is a concentrated effort to
combat fraud. Sanford’s request for an independent audit is a prudent one, and
these efforts could lead to the identification of systemic deficiencies and
encourage real reform.
Matthew Glans ([email protected]) is a legislative
specialist for The Heartland Institute.
Basically, what this illuminates is that, as usual, our governor's focus is NOT on South Carolina and what it needs or does not need. It is on playing to these national libertarian groups — this one, the Club for Growth, the editorial board of The Wall Street Journal and the like — for whatever national purposes he and they have.
These battles — over unemployment benefits, school vouchers — aren't actually FOR or ABOUT the people of South Carolina, whose actual lives are merely the pawns in these ideological posturings.