Why? Because it is about to be empty. Just at the time when we should be ensuring that people don’t get dumped on the street, we are looking at an unemployment fund that is reaching back for its last pennies. From the always informative Josh Richman’s Political Blotter a few days ago:
“Assembly Labor and Employment Committee Chairman Sandre Swanson, D-Alameda, says lawmakers are going to have to work across the aisle to fix California’s unemployment insurance fund, which will be broke by January.
“He apparently means lawmakers should be talking about raising the payroll tax that employers pay on each worker to bankroll the state unemployment fund. And for Legislative Republicans presumably still smug about preventing any tax increases in this year’s budget fiasco, that’s going to be a tall order….
“Swanson cited a report showing the state unemployment fund will be $1.6 billion in the red by 2009’s end of 2009 and $3.5 billion short a year after that. But the situation might be even more dire: That report assumed a 6.4 percent unemployment rate and a 6.6 percent rate for 2009, but unemployment already had risen to 7.7 percent as of August.”
As David Dayen pointed out a while back, our unemployment is getting to Rust Belt post-factory days. Yes, that bad. And now we can’t even count on unemployment insurance to be there.
And don’t you think that the Republicans will be lifting a finger to prevent this disaster. Because to do so would require California to pull itself out of the race to the bottom on taxes. Again from Josh Richman:
“California has the lowest taxable wage base allowed by federal law – $7,000, a figure that hasn’t changed since 1983 – but 42 states now tax more than the first $7,000 of employee earnings. In fact, federal law requires a base maximum tax rate of at least 5.4 percent for state unemployment insurance taxes; California is right at that federal minimum.”
We have some the highest costs of living, yet our unemployment fund takes in money like we are in Mississippi, and then can’t do anything to help those who are laid off.
There are two ways to fix this problem. One would be to drastically reduce the number of unemployed Californians between now and January. But with all the bad economic news flying at us, not even the Republicans could say that’s a reasonable solution with a straight face.
And then there’s reality: increasing the taxes for unemployment insurance. You can do that by either increasing the cap to something reasonable ($7,000? really?) or by increasing the rate. I’d prefer we get cracking on the former, but a balanced solution would involve adjusting both.
Just Fix It
Brian Leubitz runs Calitics.com, the leading California progressive blog covering California politics and policy, and is a candidate for Vice-Chair of the California Democratic Party. He holds a law degree from the University of Texas and a Master of Public Policy (M.P.P) from the Goldman School at The University of California, Berkeley. After practicing law in San Francisco, Brian transitioned into politics and launched Calitics .com in 2005. He has worked on several campaigns in the state, including the Yes on 93 (term limits reform) and the No on 98/Yes on 99 (eminent domain and property rights) campaigns. He currently is a member of the Democratic State Central Committee, serves on the CDP’s resolutions committee, and is on the boards of the San Francisco Young Democrats and the Alice B. Toklas LGBT Democratic Club.
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