‘HIGHLY PROBLEMATIC’
Critics question $400 jobless plan
As Gov. Charlie Baker said he intends to accept President Trump’s plan to boost unemployment weekly benefits by as much as $400, fiscal watchdogs tell the Herald that the plan requiring states to pay $100 each week is “highly problematic.”
Massachusetts — with the highest unemployment rate in the country at 17.4% — simply doesn’t have the money, said Greg Sullivan of the Pioneer Institute.
“The federal government is asking a state to pay a gigantic amount of money when it’s flat broke,” Sullivan said.
“This proposal is highly problematic for Massachusetts,” he added. “It’s tough to imagine how the state can come up with this money.”
As Bay State officials stare at a $6 billion structural deficit amid plummeting tax revenue, adding this program would be quite difficult, said Eileen McAnneny of the Massachusetts Taxpayers Foundation.
“The state would be hardpressed to find that money,” she said, noting the numerous competing needs during the coronavirus crisis.
Baker this week signaled the state would apply to receive funds under the new program.
Trump recently signed an executive order to extend additional benefits of $300 or $400 per week — depending on which plan governors choose — to the unemployed after Congress failed to strike a deal to extend a federally funded $600 weekly benefit.
Under Trump’s plan, states are required to ante up 25% of the added cost, or $100 per claimant in order to access the extra federal benefit dollars.
“They’re asking the states that are getting deeper and deeper in the red to pony up additional funds,” said UMass Amherst economics professor emeritus David Kotz. “How are they going to do that?”
“Massachusetts just doesn’t have extra money to put into unemployment compensation,” he added.
Baker said he would have to dip into emergency aid provided in the CARES Act to fund the unemployment extension.
But the state has several other pressing needs that it needs to fund, including schools and universities, Sullivan said.
“Along with every other state, we just don’t have the money here in Massachusetts,” he said. “Everything is hitting all at once.”
If states don’t chip in the $100, it would reduce the weekly boost to claimants from $400 to $300.
The Massachusetts Unemployment Trust Fund is facing a projected deficit of $3.2 billion by the end of the year, and $6.2 billion by the end of 2021, Sullivan noted.
Instead of the state paying 25% of the added cost for the unemployment benefits, Sullivan is keeping his fingers crossed that Congress will pass a $400 compromise when they reconvene.
“We just don’t have the ability to deficit spend like Congress can do,” he said.
But the fed can’t print money forever, said Chip Ford of the Citizens for Limited Taxation.
“They can’t keep paying out more and more,” he said. “People need to get back to work.”