While President Obama and congressional Republicans negotiate toward a Dec. 31 deadline, North Carolina faces its own fiscal cliff.
The state owes the federal government about $3 billion that it borrowed to pay unemployment benefits. That's a big chunk of change -- it's the fourth biggest unemployment debt of any state in the nation -- and the number grows daily because the feds assess penalties until it's paid off.
The problem has been bubbling for a while (to read my column on it from last May, click here), and has finally gotten bad enough that it should be near the top of the legislature's to-do list when it convenes in a couple of months.
Lew Ebert, CEO of the North Carolina Chamber, stopped by the Observer editorial board Wednesday to talk about it. Ebert said the unemployment debt -- not taxes, not regulations -- was the single biggest cloud hovering over the state's economy. Those other issues can't really be tackled until state leaders deal with the debt, he said.
Ignoring it, Ebert said, is actually a tax hike, because the federal penalty on businesses keeps accruing -- to the tune of $400 million this year, he said.
The Chamber, representing businesses, advocates a three-step approach:
-- First, bond out the debt. That means issuing bonds to pay off the feds. The debt's still there, but then is owed to the bondholders, not the federal government, erasing the federal penalties. It also puts all N.C. taxpayers on the hook. Ebert says Treasurer Janet Cowell, a Democrat, indicated she would be open to the bonding. The Treasurer's office has not returned my call asking about that today.
-- Raise rates on employers.
-- Cut benefits to the unemployed.
Ebert acknowledged that businesses enjoyed generous tax cuts in the good times, and those cuts contributed to the system's insolvency. So do people getting benefits who shouldn't and, of course, the Great Recession.
For more detail on the Chamber's approach, click here.
Everyone will have to share in the pain to fix the problem. It's good that Ebert recognizes that higher rates have to be part of the solution. No one's getting rich off their unemployment benefits, but as part of the fix, liberals will have to acknowledge that millions are paid out improperly.
-- Taylor Batten
Well, we can do a couple of things.
ReplyDeleteOne, do what Obroken Record has done for 4 years and blame Perdue and the Democrats or two, rob the education lottery like Perdue did on several occasions.
The previous clowns had no desire to "fix" the sytem. It's already "fixed" and now he needs to unfix it in an equitable manner. Our state has been run like a banana republic for 150 yrs, and hopefully Gov Pat doesn't fall into the same trappings as our previous royalty has, or he'll be a 1 term Gov.
ReplyDeleteMaybe we can get a group discount with the other states on someone to handle all of this in bankruptcy court. Maybe we can use the lawyers California is using.
ReplyDeleteSo now that we have a Republican governor taking over, the Observer suddenly discovers a problem.
ReplyDeleteJust keep right on being irrelevant Observer. I don't even use you to light my charcoal grill anymore because I don't like the taste it leaves on the food!
Good one John, in fact I heard the one where no one wraps fish in the Observer papers anymore, because the fish complain about the smell.
ReplyDeleteIts a good thing the cracker jack team at the CO is just figuring out now that this is a problem.. And pay no attention to the states the re-elected Dem Governors in other states, these are the same states that while increasing taxes to "decrease" the deficit only made it worse - see Illinois and California. States that elected GOP Govs, Wisconsin, Ohio amongst others balanced the budget w/o raising taxes - its called acting like a grown up for you libs.
ReplyDeleteBut I digress, for the CO just to determine now we have a spending problem is a real gem. But never fear, the smartest President ever is about ready to jack up taxes of course that will fix his trillion dollar + spending habit.. He is the man for the job and the man who can make the tough decisions.. Brilliant.
But but but it's supposed to be better by now.
ReplyDeleteWhat a surprise that the Observer censored this story until Janet Cowell was re-elected.
ReplyDeleteMaybe ol' Jan can ring up BFF Erskine Bowles and ask him for a loan from the money Bowles made as (a) a board member of Facebook; (b) a board member of Morgan Stanley, which underwrote the Facebook IPO; (c) runs the management firm Cowell hired to invest the state pension fund.
Let's get driling for our offshore oil!
ReplyDeleteThe Chamber lost all credibility with me 2-3 years ago when they supported spending Obamas borrowed stimulus dollars for a rail commute from Charlotte to Raleigh that would have reduced travel time by all of 10 minutes.
ReplyDelete"So now that we have a Republican governor taking over, the Observer suddenly discovers a problem". Did you not see the reference to the column from last May? I guess you weren't paying attention when they borrowed the money either. Read the words and stop assuming a motive.
ReplyDeleteJohn, Skippy and Garth:
ReplyDeleteSurely there's enough here for you to disagree with that you don't have to resort to saying things that are just clearly untrue. You all say that the Observer is just now cluing in to this problem. But, as rgf points out in a comment, I wrote a column on this exact issue seven months ago.
- Taylor Batten