The state owes the federal government about $3 billion that it borrowed to pay unemployment benefits.
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. 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.