First Published 10-13-10
It is said that the reason a Tier 5 unemployment extension cannot be passed is because it cannot be funded. The unemployment rate is said to be set at 9.6%. So where is the money being paid into the Federal Unemployment Trust Fund by the other 90.4% of the work force? Answer: In a portfolio, and that is the closest thing to a straight answer you are going to find anywhere.
If you research this subject you will find investments, returns, monies taken in, monies paid out, monies loaned, monies owed and burn rates. Of course all of these categories are broken down by state and then by district making the understanding of the figures a task for an Olympic grade team of auditors. However, there is one statistic that stands out and it indicates that the Federal Unemployment Trust Fund takes in at least $6 billion per year.
I have seen responses on the comment board indicating that there are a lot of people among the 99ers who have been paying in unemployment for thirty plus years and have only drawn 99 weeks. So let’s try something simple. Let’s be generous and just look at one year’s trust fund revenue drawing 3% interest. In one year $6 billion gains $180 million in interest and over thirty years that $6 billion earns $5.4 billion in interest for a total of $11.4 billion. Remember, that’s at 3% and not figuring in compound interest as I am not willing to spend three or four days trying to figure out the compound interest with 6 billion being added to the fund per year, quarterly, by state, and by district. I’m going to say that there would have to be $500 billion in that account after 30 years, even with a recession now and then.
So, after putting $500 billion into an account as a hedge for the workers to allow them to survive a recession, why are there no moneys to pay for a Tier 5 extension. Well, without breaking it down 10,000 different ways, this is as close as I can come. The 2002 Reed Act allows for excess funds from the Federal Unemployment Trust Fund to be redistributed back to the states’ unemployment accounts. This wouldn’t be a bad idea, except that when the money came back to the states it was counted against what the employer had to pay in, thus reducing the amount the employers had to pay per worker.
In essence, what is happening is the employer is paying a set amount into the federal fund. That money is being invested and when it yields a return, rather than those monies being set aside to insure employment, it is being sent back to the states and given to the rich businesses in the form of tax breaks. This is what the breakdown in the numbers is designed to hide.
Now that there are millions of unemployed, not only is the money not there to pay unemployment insurance, but, as the rate the employer has to pay has been reduced by 30%, it can never catch up, as hundreds of thousands more become unemployed every month. Once again, what was supposed to be our property is swindled and funneled into the vaults of the wealthy and now that they have it, they are using all the power that it wields to make sure we never get it back.
Note: Under Bush’s cuts on capital gains and taxes in general for the top two percent, the rich paid minimal tax on these monies invested for them and returned to them, with a profit by the low life scum bags posing as our representatives.
We need a complete audit of the federal and state unemployment system to bring this Ponzi scheme to light and find out what happened to our unemployment money.