South Dakota Governor M. Michael Rounds joins the ranks of Republican governors playing politics with the stimulus package, telling that Sioux Falls paper that he will reject five million dollars of unemployment insurance included in the stimulus package. Governor Rounds says he's concerned that accepting the money could (could—I have yet to hear a single governor say it will) require South Dakota to raise its unemployment insurance tax in a couple years after the stimulus money runs out.
The Republican commentariat celebrates, but Governor Rounds's gambit is pure political theater, not to mention bad economics:
- The $5M Governor Rounds would so bravely reject is less than 1% of South Dakota's expected $662.5M stimulus take. That's like picking only the blue sprinkles off your birthday cake.
- Unemployment benefits are one of the most effective economic stimulus tools available, with every dollar generating $1.64 in economic activity. That's second only to increasing food stamp benefits for direct economic impact and better than infrastructure spending, general aid to state governments, and tax cuts, none of which Governor Rounds is poo-pooing.
- The "strings" on the unemployment aid Governor Rounds doesn't like are actually requirements that the New York Times says at least half of the states have already enacted:
To qualify for the first one-third of federal aid, the states need to fix arcane eligibility requirements that exclude far too many low-income workers. To qualify for the rest of the aid, states have to choose from a menu of options that include extending benefits to part-time workers or those who leave their jobs for urgent family reasons, like domestic violence or gravely ill children [editorial, "What Part of 'Stimulus' Don't They Get?" New York Times, 2009.02.23].
- The "strings" would actually modernize unemployment insurance rules to take advantage of computerized income reporting (ah, computers: that's why Gov. Rounds doesn't like it).
- The rule changes would expand coverage by keeping better track of part-time and low-income workers... you know, folks who could probably use more help than the GOP's Wall Street pals.
- The whole point of the stimulus package is to shorten the recession. Boost the economy and get people back to work sooner, and the state won't have to draw down its unemployment insurance funds as quickly. Let the recession roll, and we'll be raising unemployment taxes sooner to replenish the more quickly depleted fund.