Tennessee governor Phil Bredesen looks to be joining Mark Sanford, Haley Barbour, and Bobby Jindal in rejecting the boost in unemployment insurance that's included in the stimulus. Matt Yglesias takes him to task here. I'm a well-known Bredesen skeptic, but I think he's actually getting a bum rap on this one.The stimulus doesn't just give states free unemployment insurance money. It ties that money to an expansion in unemployment insurance eligibility and benefits. The problem is that Tennessee's unemployment insurance trust fund is running dry. In July of 2008, it had almost $700 million. It's at $292 million today. If current trends continue, it will be insolvent by early-2010. In order to replenish it, Bredesen is asking his Republican legislature to permit an increased tax on employers.The stimulus would provide Bredesen with $141 million for the trust provided he enlarges the program. But if he enlarges the program, it runs out of money faster, and he has to ask the legislature for an enlarged tax increase that they probably won't grant. In other words, his state can't afford the unemployment benefits it's offering now, and it really can't afford a rapid expansion in unemployment benefits that's only temporarily funded by federal money. That's not, his advisers are quick to caution, a philosophical dispute. They say Bredesen supports the stimulus bill as passed and this portion of it in theory, but that the unique facts of the Tennessee trust fund make it unsuited to their state's fiscal condition. IN DEFENSE OF PHIL BREDESEN.
Tennessee governor Phil Bredesen looks to be joining Mark Sanford, Haley Barbour, and Bobby Jindal in rejecting the boost in unemployment insurance that's included in the stimulus. Matt Yglesias takes him to task here. I'm a well-known Bredesen skeptic, but I think he's actually getting a bum rap on this one.The stimulus doesn't just give states free unemployment insurance money. It ties that money to an expansion in unemployment insurance eligibility and benefits. The problem is that Tennessee's unemployment insurance trust fund is running dry. In July of 2008, it had almost $700 million. It's at $292 million today. If current trends continue, it will be insolvent by early-2010. In order to replenish it, Bredesen is asking his Republican legislature to permit an increased tax on employers.The stimulus would provide Bredesen with $141 million for the trust provided he enlarges the program. But if he enlarges the program, it runs out of money faster, and he has to ask the legislature for an enlarged tax increase that they probably won't grant. In other words, his state can't afford the unemployment benefits it's offering now, and it really can't afford a rapid expansion in unemployment benefits that's only temporarily funded by federal money. That's not, his advisers are quick to caution, a philosophical dispute. They say Bredesen supports the stimulus bill as passed and this portion of it in theory, but that the unique facts of the Tennessee trust fund make it unsuited to their state's fiscal condition. 
