Republicans today are celebrating over the underfunding of the federal unemployment insurance system. They fail to note, however, that they are ensuring more debt and ultimately a diminished ability to provide benefits to Americans who have lost their jobs through no fault of their own.
Key facts:
• The original reason the FUTA surtax was established - to pay back money the UI system borrowed from the Treasury - is just as relevant today as it was decades ago. The Federal Unemployment Trust Funds now owe the U.S. Treasury $47 billion. Congressional Republicans want to make that debt burden even bigger and thereby undercut the financial underpinnings of the federal unemployment insurance system.
• The wage base upon which the total FUTA tax is paid (the first $7,000 paid annually to each employee) has not been increased since 1983. This has reduced the effective tax rate under FUTA, even with the inclusion of the surtax.
• Ensuring a solvent unemployment insurance system used to have some bipartisan support. Even the Bush Administration’s budgets called for extending the FUTA surtax to “maintain the ability of the unemployment system to adjust to any economic downturns." But now Republicans in Congress are abandoning the unemployment insurance system and those who depend on it.
