EDITORIAL: GOP, governor should wait on cutting federal benefits

Jun. 27, 2013 @ 05:00 AM

North Carolina’s unemployment index has dropped for the fourth consecutive month, according to the N.C. Division of Employment Security. But the state's 8.8 percent rate still lags behind the national unemployment rate, hovering now at 7.6 percent.

Think that means we're in a recovery?

Tell that to more than 70,000 North Carolinians who, beginning July 1, will be blocked from receiving extended federal unemployment benefits.

Some 540 of those who will lose extended benefits live in Lee County.

Republican leaders in the N. C. General Assembly, in their attempt to right the state's fiscal ship, passed legislation that, among other things, would cut state unemployment benefits. States that make that move – and so far, no other state has followed suit – become ineligible for federal extended benefits, funds used to assist the long-term unemployed who have exhausted other forms of benefits and assistance.

Democrats have called on Gov. Pat McCrory and the state's budget writers to step in to help salvage the benefits, but so far the governor hasn't acquiesced. McCrory and others say postponing the July 1 date to Jan. 1 – when the federal assistance is anticipated to be shut off anyway – will delay an effort by the GOP to repay $2.5 billion in debt North Carolina owes to the federal government.

Many other states faced the same quandary we did, but only here was a decision made to terminate the federal program's benefits so quickly. In doing so, state lawmakers created a plan to reduce state unemployment compensation and increase employer contributions into the system, as well as eliminating extended benefits. The new plan, according to the GOP, will help N.C. pay off the debt it owes to the federal government three years early – in 2016 instead of 2019.

It doesn't sound like a balanced trade-off at all.

Politicians are playing the blame game as July 1 approaches. Republicans say previous Democrat-led legislatures made poor fiscal decisions, which gave them no other choice but to make difficult calls to accelerate debt repayment. Democrats say it's more evidence the GOP is heartless.

Either way, North Carolina’s unemployment rate already ranks among the five worst in the nation. Pulling an additional $20 million per week in spendable consumer dollars from the state's economy – that's one estimate of impact of cutting the benefits – seems counterproductive. There's no easy solution to the state's debt issue, but taking dollars out of the market could very well result in a reversal of the declining unemployment rate, a number that is in some ways already artificially low – not to mention the additional stresses resulting from 70,000 people suddenly losing what little income they have.

All the while, McCrory and Republicans in Raleigh say they're trying to get folks back to work. They're doing a very poor job, so now the poor are fixin’ to get poorer.