States that have borrowed billions of dollars from the federal government to cover the soaring cost of unemployment benefits would get immediate relief from the Obama administration under a plan to suspend interest payments for the next two years.
The proposal, which will be included in the budget request President Obama will send to Congress next week, would allow states to avoid raising taxes on employers to cover the payments – which are projected to total $3.6 billion through 2012, according to independent estimates.
At some time, we are going to have to pay for our debt. You can’t just keep putting it off. Thank the Lord that He has already paid off the debt that is most expensive.
Let the bail out of the state begin!
How convenient to postpone the pain until 2013. Re-election more important than the country? Sure seems that way.
Few employers will be fooled. Though it varies from state to state the general pattern is to impose unemployment taxes on wages paid. When faced with a surcharge on any expense the tendency is to look at the total amount and reduce it enough to maintain basic operating margins. This is unlikely to improve the hiring situation.
This from the same president who has just told business that we have to “share the profits with []our workers.” Memo to the clueless dweebs in Washington — profit is what’s left over [i]after[/i] you pay your people. Business owners, especially Chamber of Commerce types, get the leftovers.
A business that is not profitable is not sustainable. End of discussion.
You just can’t say no to Santa Clause. And as others have pointed out this is not debt forgiveness. The principle and interest will still have to be paid, but after the election.
#4-With the wink, wink, nod, nod promise that the governors who help O-man get re-elected will have the debt forgiven. Same old stuff; new day.
Seems we are heading toward the death spiral:
1. Housing bubble implodes, economy sucks, unemployment skyrockets
2. Massive Fed Govt intervention, no stimulus, economy still sucks, unemployment stays stratospheric, extend unemployment checks to infinity
3. State unemployment funds dry up (surprise)
4. Fed govt bails out states, surcharges on employers
5. Employers delay hiring even longer
6. And round and round and round we go.
And the prez tells nervous business owners that “you have to share [hint: redistribute] your profits to your workers”. Will that become law they wonder????? More sitting on hands and cash.
Prez lauds Fed govt regulations as “good for business”. Business owners scratch heads trying to think of one case where that might be true for them.
When asked if the Muslim Brotherhood is a threat to America, prez dodges question and claims they are just one small faction among many in Egypt. Must not have heard about the 50 chapters of the MB here in America right now.
Move along now, nothing to see here, move along now.
This is a good move. There’s no such thing as a free lunch – at some point we must fulfill our obligations. Not doing it now just means taxes on businesses immediately. Not funding unemployment benefits means that states would have to raise taxes themselves.
Not paying unemployment benefits means that there’s less spending. Businesses aren’t spending anyway – it’s absolutely true that the unemployed will spend the money they have – on the goods businesses provide.
#7–So unemployment is good for America? That’s just about the darndest thing I’ve ever heard. Employment is good for America. If the prez had called off the ideologues who are cranking out regualtions faster than you can keep track of, started drilling for oil in the US, got out of the unions’ back pockets, made the Chinese float their currency (or else) and cut business taxes, the recession would have been over a year ago. There would be increased employment and increased government revenue. As it is, Geitner and Burnanke are telling us it will be years before we recover. Businesses are holding on to huge amounts of capital because they believe the policies of the current administration combined with Obamacare are going to strangle them. Personally, I would rather have a job than a welfare check.
And the money will come from – where? (John Q Public’s pocket, of course).
How I wish there were someone in the White House and Congress who would recognize that the way to reduce the pressure of unemployment insurance payments on state governments would be to pass helpful legislation/repeal harmful legislation with the goal of helping small businesses grow. More business growth, more jobs. More jobs, less unemployment. But duh, little me, I am not an economist.
#8 most people would have a job than a welfare check – but as one wag noted, There is the man who is always saying people can get work, but he doesn’t know where any of the jobs are.
Economists note that there is a lag between jobs and training. There are a lot of jobs open for line cooks; not enough cooks.
Businesses are holding back because there’s not enough demand. If there were more demand, perhaps businesses would want to piggy back and make a profit.
[i]Businesses are holding back because there’s not enough demand. If there were more demand, perhaps businesses would want to piggy back and make a profit. [/i]
“Holding back” from what? Expansion? Hiring? Well, yes, and yes, but lack of demand is at most a minor factor in both of those.
Expansion requires capital, which in the case of small and medium business is overwhelmingly borrowed. Before it can be borrowed, however, a bank must be willing to lend it, and lend it they are. Big Time. To the federal government.
Banks can borrow money from the Fed at nearly zero interest. They can lend it to the federal government — which has the power to force its ‘customers’ to pay (meaning tax) — at roughly 4% with essentially zero risk.
In that environment, with insatiable government demand, why bother with something as risky and messy as lending to a business, especially when evaluating that business’ credit-worthiness actually requires you to do some work and understand the business.
Expansion is also suppressed by the current administration’s blatant hostility to business, its pronouncements, its burgeoning regulations, and looming health care requirements which are odious at best, unless you’re a friend of the administration and get obtain a waiver.
Trying to start or expand a business in this political environment is like trying to plant tomatoes in late November.
What expansion is occurring is funded largely out of cash flow, and that cash flow is being bolstered by cutting back on labor. Hiring is also being suppressed by the same factors restraining expansion.
More importantly, the vast majority of job creation comes from start-up small and medium business. For a start-up you can at least triple the borrowing needs for expanding a company of the same size.
Unemployment in this recession is not so much the result of job loss — more jobs were lost in the 2000 to ’02 event — but from the lack of job [i]CREATION[/i] which is overwhelmingly a function of adverse government deficits, policies, and attitudes.
In my business I have growing demand I cannot meet, primarily for want of long-term financing, and I know plenty of other small business people in the same situation.
Sorry John. I think the problem is what I previously listed. I don’t have any jobs to give, but if we had done what I suggested, there would be plenty. You may say, there is no proof of that, to which I would say, (1) look at Kennedy and Reagan for proof and (2) there is absolute proof that what we are doing now isn’t working.
I received my updated unemploymentinformation. I own a small business, a total of 5 employees. Just cut back to 4. In SC the commision squanered so much money, they scrapped the old system. The new system raised my rates 450%. Now between state and federal unemployment taxes, I will pay 11%. I have not had a claim since 2004. I had over $8000 in the “pool” that is gone. So the part timer that was to be replaced at 25 hours a week, will not be replaced. a raise in costs of 10% I just cannot afford. You just can’t fix stupid.