Sunday, April 19, 2009

Short-sighted thinking

The Statesman's Bill Rogers Roberts has a nicely written piece about foolish decision making by business leaders and Department of Labor Director Roger Madsen. A few years ago, businesses thought they found a way to reduce the unemployment tax they pay. Actually, they did find a way; they convinced the legislature to lower the tax rate.

First, in 2002, the tax rate was frozen, even though more workers were entering the market. Two years later it was clear that the unemployment fund was underfunded, as compared to how it should've been funded without the freeze. It would have been a big hit on employers to fully fund it, so all players decided to just fund about half of what was needed, and call it good.

And now they've got a big problem.
Now the law and the recession are clobbering Idaho businesses, which saw unemployment-tax rates climb by 70 percent in 2009 to pay checks to the growing number of unemployed workers. Businesses could see another 100 percent increase in 2010 at a time when many already are struggling, labor officials say.
The article has this revealing quote from Madsen:
I will admit I wanted consensus more than I wanted to impose my opinion (on the committee)," Madsen said. "I just didn't push it hard enough, I guess.
This tells me one of two things happened. Either Madsen knew better but caved in politically, or he didn't know, and is now trying to make us think he did.

And, predictably, Wayne Hoffman uses this problem to offer up the thoroughly discredited idea that trickle down economics is the best way to wealth for everyone. If George Bush's administration taught us anything, it was that the rich can get richer and richer and richer, and the middle class and the poor don't benefit from it.

I would have liked to see Rogers Roberts name the key players in the business community who pushed this stupid idea.


fortboise said...

That would be Bill Roberts (rather than Will Rogers :-).

No need to identify specific perpetrators here, this is standard stock in fare for IACI and the Idaho Legislature.

Taxes bad. Very simple.

Never mind the foolishness of their notion that a recession would never exceed 9 months, the idea that "we don't need to pay as much during good times, we'll just pay more when times are bad" shows that our fearless leaders don't have the first clue about what "insurance" is.

alan said...

Man, I'm stuck on the Rogers thing these days. Thanks.

Standard fare, true, but I'd still like to see the perps called out. Maybe it would shame them away from something similar in the future. Because, taxes bad, always.

ericn1300 said...

Hoffman wrote "unemployment insurance is hardly a panacea; its impact on wages and on savings wages is demonstrable and it eliminates careful consideration of private sector solutions"

so what is a private sector solution to unemployment?