Governors Rick Perry of Texas, Mark Sanford of South Carolina, Bobby Jindal of Louisiana, Haley Barbour of Mississippi, and Bob Riley of Alabama have rejected stimulus funds that would have gone for unemployment benefits.  Accepting the funds require states to “enhance” unemployment benefits by extending benefits to part-time employees, workers who quit for “compelling family reasons” such as illness of a close relative, and extending the payment window for the unemployed who have used up their benefits but are in job training.

Why are they refusing?  They’re taking the long view:

To get the money, states must expand unemployment benefits, such as covering part-time workers who lose their jobs. Texas Gov. Rick Perry said he doesn’t want the stimulus money because his state would have to raise taxes on businesses or cut back on benefits once the federal funding runs out.

Critics say its all about politics:

South Carolina Rep. James Clyburn, the third-highest ranking Democrat in the House, has criticized Sanford’s position on the stimulus in recent weeks. In a statement Sunday, Clyburn said voters want elected leaders to put aside politics during the economic crisis.

“I think what we’re seeing is some governors making political calculations with an eye toward their next job when they need to be making practical decisions on behalf of their constituents,” he said. “And I think it will backfire.”

He’s not playing politics, of course.  Just looking out for the folks.  What a hypocrite.  Why do I say that?  Look at what accepting the stimulus funds would actually accomplish:

The National Employment Law Project (NELP), which advocates for low-income workers, estimates that 533,902 people would benefit from the changes in the unemployment law set out in the stimulus. Maurice Emsellem, policy co-director for NELP, said some states could face automatic tax increases if their unemployment funding doesn’t keep pace with demand.

“By deciding against taking millions of federal dollars, the governors are denying benefits to hundreds of thousands of workers and triggering tax increases … that are going to hurt the economy when it needs the help most,” Emsellem said.

So, in the normal course of things, without the stimulus, if a state’s unemployment numbers rise, for some states taxes automatically increase.  But the stimulus bill requires states to expand the numbers of people eligible for these benefits, by at least half a million people.  So that extra half million will continue to be eligible for them when the Federal money runs out.  And who will be responsible for funding that larger pool of recipients?  State taxpayers, of course.

What accepting the funds does is kick the can down the road, while giving it steroids.  There will be much larger numbers of people on the benefit rolls with no guarantee states’ economies will be more able to stand the inevitable future tax increases.  Sounds more like a short-term political benefit for the stimulus boosters than any longer-term economic recovery plan for states to me.

A study by the Nelson A. Rockefeller Institute of Government suggests states will have to make difficult decisions once stimulus money runs out. States should use the breathing room provided by the stimulus to look for long-term budget solutions, the report says.

So why not start now, by refusing to expand entitlement programs that you know will burden the state’s economy forever?  I think those Governors are looking out for their states by doing just that.

Other Governors are not:

South Dakota’s Republican Gov. Mike Rounds signed a law last week changing unemployment eligibility requirements to get $5.9 million from the stimulus. Rounds said in a news release that he is considering whether to support making further changes to the system to get more of the money.

Time will tell which kind of thinking, long or short term, will result in the better outcome.  Of course, the evaluation of the results depends on what the real goal is.  If re-election and the expansion of government is the prize, the short-termers may well come out ahead.  That will be a sad day for those of us who prefer the government to get out of our way.

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