TEXT OF INTERVIEW
Steve Chiotakis: Today, President Obama visits with representatives from a dozen or so community banks. It’ll be the same message he gave to big bankers earlier this month: lend money to small business so the economy can improve.Of course the economy is sporting a 10 percent unemployment rate. And states that provide jobless benefits are having some trouble keeping up. Nearly two years after the financial crisis began, many state funds have run out of money to pay benefits. Marketplace’s Mitchell Hartman joins us live to explain. Good morning, Mitchell.
Mitchell Hartman: Good morning, Steve.
Chiotakis: So how deep is the hole that states are in right now?
Hartman: Twenty-four billion dollars, and they’re getting deeper in every month. Here’s the problem: The basic unemployment compensation program in each state is funded by a small payroll tax on employers. Now in normal times, they raise enough money to pay out benefits. But of course these aren’t normal times. We have 8 million people who’ve lost their jobs since the recession started, and of course layoffs have continued. So there are now 25 states that have completely run out of money already. They’ve had to borrow billions from the federal government just to keep cutting checks. The Department of Labor predicts that only 10 states will still be in the black by 2011.
Chiotakis: Are unemployed people, Mitchell, at risk of not getting their checks?
Hartman: No, they’re not for the most part. There have been a few scares in states that temporarily ran out of money, like South Carolina. But the feds do backstop these plans, at least for a little while. Ultimately, though, the states have to pay the money back and they have to refill their unemployment funds. And that means either cutting benefits and dropping people from the rolls or raising payroll taxes on employers. You can imagine how popular that is right now. So in state after state, they’re having these horrible Solomonic debates — should they cut unemployment checks to residents who are struggling, or should they raise taxes on businesses that are struggling?
Chiotakis: All right, Marketplace’s Mitchell Hartman with us this morning. Mitchell, thanks.
Hartman: You’re welcome.