I posed these questions on wheresericcantor.com in response to a post dated today concerning the $125 million Unemployment Stimulus. After several comments between myself and Brad, I posed the following questions, which were promptly deleted. I believe they are fair questions that must be considered before we reconsider accepting the $125 million dollars from the Federal Government as an Unemployment Stimulus. Since Tom Shields was the quoted source, I have sent the following email to him for a response.
Dear Professor Shields,
In reading the plethora of blogs today, I came across a photograph which I recognized as one I personally took at an event for Delegate O’Bannon. It naturally caught my eye.
In reading the text that was posted, there were several statements attributed to you. One of which was:
Cantor and O’Bannon have served as dual-roadblocks to progress and agree on most things, including denying health care to kids and turning away $125 million in unemployment benefits that we already paid for.
After a bit of banter back and forth, “Brad” never refuted my assertion that this $125 million was going to be too costly in the long run. So I posted the following questions that were promptly deleted, twice. It seems “Brad” is willing to parrot something said by another Democrat without either understanding the potential down side to the actions or wanting to engage in a logical discussion. Since “Brad” brought it up and mentioned your name, I will pose the questions to you.
I have done a rough cost – benefit analysis and my conclusion is that $125 million is far to low of a figure to be fiscally viable. In order to accept the terms and conditions that come with acceptance, we would need a figure approaching $1 billion to make the numbers work. The $125 million is only economically sound if the strings were removed.
Here are the items I considered in my analysis:
1. Estimate the cost of extending unemployment benefits from 26 weeks to 59 weeks as required by accepting the money.
2. Estimate the cost of increasing the weekly benefits by the unemployment stimulus required amount.
3. Estimate the cost of providing unemployment benefits to part time workers.
4. Add the annual cost of items 1, 2 and 3 and multiply by 10 years.
5. Subtract $125 million.
This will leave a substantial shortfall over the next 10 years. Perhaps as much as $1 Billion.
6. How much will we have to increase unemployment taxes on businesses to make up that money?
7. How many additional jobs will be lost due to the additional tax?
8. How much will we have to cut Education, Transportation, Public Safety or other programs to make up the shortfall?
Keep in mind we are already $6.5 billion in the hole. We MUST cut government spending.
My analysis shows $125 million is change. Pocket change.
30 states have already run out of unemployment money, all of them accepted the unemployment stimulus.
Professor Shields, would you be able to share the numbers you used in your cost – benefit analysis to convince you this is something that will not cost the Commonwealth more, in the long run, than it is worth? As a small business owner struggling with a downturn in revenues, I have already had to skip a number of personal paychecks in order to make the payroll for my employees. I am doing my best to hang onto all of them, but I am afraid any increase in taxes will result in higher unemployment, as I will be forced to let people go.
If I thought this money would help in the long run, I would be all for it. Unfortunately, my analysis indicates it will exasperate an already tenuous situation.
I am keenly interested in your analysis in this matter and will post your answer in full.
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