Press corps letter from Berger spokesperson sets new low for deceptive spin

Phil BergerAt some point, you’d think the conservative elected officials behind North Carolina’s stingiest-in-the-nation unemployment insurance cuts would at least have the courage and decency to stand up, look straight in the camera and take responsibility for the the pain they are about to inflict on 170,000 jobless workers and their families. And indeed, while they’re at it, they would also do well  to note the impending damage to the state’s economy as a whole as it is forced to do without $600 million in federal dollars and endure an estimated overall decline in economic activity of around $1.2 billion.

Unfortunately, as next Monday’s benefits cut-off deadline  fast approaches, courage and decency are in short supply on Jones Street and spin and blame deflection appear to be the order of the day. Last Friday afternoon, in fact, a paid flak for Senate President Pro Tem Phil Berger set what might be a new low in this department with a letter to members of the press corps that literally overflows with inaccuracies and downright falsehoods.

Here, in the interest of setting the record straight, is the staffer’s letter interspersed periodically with the actual truth. Our corrections and additions appear in bold italics.

——– Original message ——–
From: “Amy Auth (President Pro Tem’s Office)” <Amy.Auth@ncleg.net>
Date: 06/21/2013 3:39 PM (GMT-05:00)
To: “Amy Auth (President Pro Tem’s Office)” <Amy.Auth@ncleg.net>
Subject: Unemployment Insurance Reforms

Dear Members of the Press Corps:

As we near July 1, I want to provide a quick reminder on why the General Assembly passed legislation earlier this session to reform the state’s unemployment insurance system.

During good economic times, previous Democratic legislatures and administrations made irresponsible decisions that hurt the solvency of our state’s unemployment insurance system.

*The irresponsible decision (supported by members of both parties) was to  repeatedly cut employer tax rates to the point that insufficient funds were collected in good times to pay out in benefits during bad times. The core mechanism of the unemployment insurance system was thus undermined.

When the recession hit, North Carolina was completely unprepared to pay the flood of new unemployment claims and was forced to borrow more than $2 billion from the federal government. In fact, our state had the 4th highest UI debt in the country behind only California, Pennsylvania and New York.  House Bill 4 included a prudent plan to pay it off by 2016.

*”Prudent” this plan is not. It is, in fact, the most radical overhaul of a state unemployment system in the nation. It reduces unemployment insurance by more than 70 percent in the out years, fails to adopt “forward financing” and restricts or denies access to workers by repealing provisions that had modernized the system just a few short years ago.

If the General Assembly had failed to act, the state’s debt would not be paid off until 2019.

*The state’s debt would have been paid off by 2018 if nothing had been done through a simple credit reduction to employers for their federal unemployment insurance taxes owed. The reduction would have resulted in a $21 per employee increase each year. Thus, the cost to a 100 person company would have risen by $2,100 per year. 

By that time, North Carolina employers would pay a federal tax of $718.2 million per year rather than the standard $79.8 million per year – threatening existing jobs and making it harder to create and recruit new jobs.

*The actual figure according to the General Assembly’s Fiscal Research Division would have been $558 million. This works out to $147 per employee. There is no evidence to suggest that unemployment insurance costs represent a significant driver of employer decisions about hiring. This makes sense given that unemployment insurance costs represent 0.01 percent of employer’s total business costs.

House Bill 4:

  • Required employers to contribute significantly more money to fund unemployment benefits.
    *Not true. Employers will be paying primarily because of existing federal law and the credit reduction required when a state has an outstanding balance.  The state tax changes represent just 0.7 percent of the total repayment, $24 million by 2017. 
  • Adjusted benefits to workers who lose their jobs starting July 1 to bring them more in line with other Southeastern states.
    *North Carolina is the ONLY state in the union to do what it is doing. These adjustments put North Carolina at the bottom of the pack whereas it had been in the middle of all states in terms of average weekly benefit amount. 
  • Grandfathered in people who were receiving unemployment benefits at the time of the bill’s passage.
    *The system will no longer be effective at providing a temporary and modest support to unemployed workers. Future jobless workers are being sacrificed while policymakers attempt to neutralize the voice of the unemployed.
  • Rebuilt a $1 billion surplus in the unemployment insurance fund to prepare for the next economic downturn.
    *It is not at all clear if the $1 billion trust fund balance (this is not a “surplus”) will be sufficient in future economic downturns. Previous funds of comparable size have proven insufficient in recent recessions.

The General Assembly worked closely with the U.S. Department of Labor  when crafting the bill, incorporated their feedback and had them review the bill for compliance with federal law. (See attached March 5, 2013 letter.)

Federal fiscal cliff negotiations threw a wrench into the plan by failing to grandfather our unemployment insurance reforms (set to begin July 1, 2013) into an extension of federal emergency unemployment benefits. A condition of the fiscal cliff deal was that North Carolina maintain its current benefit levels in order to accept a one year extension of federal benefits.

*Not much of a wrench, given that on successive occasions the leadership refused to vote on amendments that would have fixed this aspect of the bill and ensured that federal emergency unemployment benefits didn’t go away.

General Assembly leaders called on Senator Kay Hagan (whose party in the U.S. Senate led fiscal cliff negotiations) and the rest of the N.C. Congressional delegation to grandfather in the unemployment insurance reforms into the final fiscal cliff package, so North Carolinians could be eligible for extended benefits. (See attached December 7, 2012 letter) Because of their failure to act, an extension of federally funded payments for those unemployed longer than 26 weeks did not happen.

*This one is a real doozy. First of all, how could Congress respond to a request penned a month before the 2013 session even convened? And how could Berger, Tillis et. al. even presume to send such a letter? Ultimately it was Berger and Tillis’ action and unwillingness to provide an opportunity to amend the bill or give careful thought to the impacts that are the real reason unemployed workers will not receive federal unemployment benefits.

Four other states (Pennsylvania, Arkansas, Indiana, Rhode Island) had changes to their UI programs grandfathered in to a previous round of federal unemployment benefit extension negotiations in February 2012.  North Carolina was the only state with a UI reform bill ready to go when federal fiscal cliff negotiations were taking place in December 2012, so we were the only state with the potential to be grandfathered.

*Wrong again. The exceptions dispensed to those states were for program changes that had been scheduled to take effect after the expiration of the original federal law prohibiting state cuts. When the federal law was extended for another year, the grandfather exceptions were deemed appropriate. Had North Carolina done likewise it would have set the effective date for its changes as January 1, 2014 . Moreover, as a practical matter, the cuts in those states were minimal compared to North Carolina’s. Arkansas’ cut reduced maximum benefits by $6. Had the feds provided an exception to North Carolina it would have defeated the very purpose of the federal law in question.

Finally, under the Sequester that took place on March 1, 2013, the federal government required a 5.1 percent reduction in unemployment benefits for FY 2013. If we had not passed HB 4, we would have still been forced to cut unemployment benefits anyway – without making our unemployment system fiscally solvent.

*Hello, Earth to Senator Berger: Cutting benefits by 5.1% would be less than optimal, but your plan ends them for thousands. That’s a 100% cut.

I hope this information helps. Have a nice weekend.
*It wasn’t and tens of thousands of average North Carolina families won’t.

Best regards,

Amy Auth
Deputy Chief of Staff
Communications & Operations
Office of the Senate President Pro Tempore
919.301.1737
amy.auth@ncleg.net

 

6 Comments

  1. Doug

    June 27, 2013 at 10:47 am

    Ok, Rob…are you saying we are cutting the least amount from unemployment? Or that us coming down closer to the average of comparable states is making us “stingy”? Do you have the average dollars paid and total weeks allowed on unemployment to back that up or are you just blathering on expecting us to believe it? If you have the data from a non-partisan site then please publish it….no NC Justice center analysis…maybe something from the GAO or some federal government publication.

  2. Doug

    June 27, 2013 at 11:04 am

    Just looked it up, these are the (maximum as that is all I could find) weekly amounts of all states that pay less as well as states within $30 a month. Looks like we are in the company we need to be in as the main states that have richer benefits are either Northern welfare states with high cost of living, or states that are actually doing well like ND. At the prior $535 we were WELL above average…even for the high cost states. (Ohio, Conn, Hawiaii, RI were our closest company then…WOW)

    Oh, and look….Barry’s democrat socialist utopia of Illinois is only slighly higher than NC! They need to do something about that! Get them up to the $653 of Mass.

    Wyoming 387
    Illinios 385
    Virginia 378
    Maine 372
    Oklahoma 368
    Wisconsion 363
    Michigan 362
    NC 350
    Nebraska 348
    Indiana 343
    Delaware 330
    Georgia 330
    SC 326
    Missouri 320
    South Dakota 295
    Florida 275
    Tennessee 275
    Alabama 265
    Louisiana 258
    Arizona 240
    Mississippi 235
    Puerto Rico 133

    http://jobsearch.about.com/od/unemployment/a/weekly-unemployment-benefits.htm

  3. gregflynn

    June 27, 2013 at 4:34 pm

    You are confusing average weekly benefit with maximum benefit. In NC average weekly benefit has been under $300 even when the maximum was $535. A big impact is that the duration of NC benefits has been reduced from a 26 week maximum to a range of 12-20 weeks based on employment conditions.

  4. Shannon P

    June 27, 2013 at 8:19 pm

    I emailed the following Reps, Senators, Government Officials etc regarding my personal situation with being unemployed. I am an educated (AAS, BA and pending Project Mgmngt Certification) professional with 16 + years in the medical field.

    Email sent May 28, 2013 to:
    Rep. Robert Brawley; Rep. Rena Turner; Sen. Andrew Brock; Sen. David Curtis; sharon.decker@nccommerce.com; pat.mccrory@nc.gov
    Cc: TheSec@doc.gov; president@whitehouse.gov

    Only replies I received:

    Shannon,

    Thank you for contacting Senator Curtis regarding unemployment issues in North Carolina. You make valid points and he shares your concerns; however, the crippling shortfall in Medicaid is a crisis that is driving state spending and policy decisions. It is undermining our ability to fund our core constitutional obligations like education.

    Members of the General Assembly are working diligently to get this under control so that funding can be restored to our education system, unemployment and other fine programs.

    In the meantime, please know that Senator Curtis considers it an honor to serve as your state senator.

    Sincerely,

    Lynn Tennant
    Office of Senator David Curtis
    District 44
    919-715-3038

    AND

    Thank you for your recent email to Sen. Brock. After taking your email into consideration, he has asked me to reply on his behalf.
    Your thoughts and concerns are very important to Sen. Brock and you can be assured that he will keep them in mind if this legislation comes to the Senate Floor for a vote.
    Thank you again for contacting our office. Please do not hesitate to let us know whenever you have an issue you would like to share, or feel we can be of service in any way.

    Ross Barnhardt
    Senate Intern
    Senator Andrew Brock
    919-715-0690

    AND, MY FAVORITE-(not!)

    Was deleted without being read on June 5, 2013 from Dept of Commerce-Valverde, Madhura

    So, out of 8 Government Elected (by the people!) “reps” 2 replied. I’m sure it was a “form letter” reply, but 6 did not even respond and 1 deleted my email w/o even reading or acknowledging it! Our government is NOT run by the people for the people!!!

  5. Doug

    June 28, 2013 at 9:48 am

    greg, I was not confused. You can scale up or down at your leisure, but it is still comparable between states. If you would like to do a similar comparison with some verifiable data…have at it. My guess is you will still get a similar result……or a result that we are actually staying at the same level with no change, which would really contradict the narrative of hysteria on this blog so I doubt you will do it.

  6. Rita

    June 29, 2013 at 1:13 am

    Rhetoric aside, the fact is 70,000 persons (which resides in 70,000 households which affects more people) will lose benefits which are struggling to make mortgage payments, purchase groceries, pay for prescriptions and survive. I have worked continuously for 45 years, was displaced and cannot find work. Thank you Rob for your tireless work and informative information. I hope the Medicaid and social service offices will extend hours to accommodate the onslaught Monday. While Pat McCory was listening and promising to the wealthy at the Grandover Resort, children were wondering where the next meal would come from and why are there no lights on in the house. Tom Tillis against Kay Hagan? I cannot wait till the midterm elections. The tyranny in Raleigh must stop. I was born at night but not last night. Socialism? Wealth redistribution? Roll Tide!