Taking with One Hand, Pointing Fingers with the Other

Around the nation, many states are taking interest-free long-term loans from the federal government to extend unemployment insurance payments. Oregon is not in that position because state law requires its payroll tax rate to adjust automatically to support a healthy balance in its unemployment insurance trust fund.

Many Oregon legislators have taken notice of the federal loans, opining that it is unfair that “responsible” states like Oregon should have to fund less responsible states which did not save enough in their unemployment trust. Perhaps even worse, the federal government is giving states an incentive to continue to keep irresponsibly small savings for unemployment insurance and other programs.

In short, Oregon legislators are angry that the federal government is acting like a bad parent who takes part of the responsible child’s allowance to pay for the bad debts of the reckless child. However, Oregon legislators treat Oregon’s citizens the same way: redistributing wealth in a way that similarly creates incentives against saving and work, hurting the very individuals it intends to help. Even the current structure of unemployment insurance encourages unemployed workers who are receiving benefits to prolong unemployment, as numerous studies have shown. Why don’t Oregon’s legislators apply their criticisms to themselves and consider pursuing policies that will reward hard work and savings instead of discouraging it?

Christina Martin is Director of the Asset Ownership Project at Cascade Policy Institute, Oregon’s free market public policy research organization.