Grim Picture

Ohio’s Unemployment Compensation Trust Fund troubles are an early warning for what many federal government assistance programs face in coming years, if officials do not do a better job of getting their affairs in order.

In Ohio, $1.8 billion was disbursed to more than 350,000 people in need of unemployment compensation last year. But according to Sean Chichelli, of the Ohio Chamber of Commerce, the fund is $1.6 billion in debt, and has been flailing since the early 2000s. What this means for everyday folks is that within the next couple of years, the trust fund will have to make up the difference by nearly doubling the amount of money it takes from employers – per employee – from $105 now to more than $200 per year.

These benefits, initially funded by taxes paid to Ohio by employers, are now being subsidized by heavy borrowing from the federal government. Those loans will have to be repaid someday. Employers and other taxpayers will continue to feel the pinch for the foreseeable future.

Among the problems facing the system is the level of fraud; millions of dollars being stolen from the system by reprehensible human beings with no real need of the benefits. Ohio must do a better job of tracking down these thieves and trying to get some of that money back.

But it also must do a better job of managing the system that was supposed to be a safety net for hard-working people who, through their employers, paid into the fund. If even at the state level the administrators of such social welfare programs cannot find a way to make them work without creating more burden than help, what hope do the bloated programs at the federal level have of solving such problems?

“Any state that has a deficit will have to have a tax increase every year until the deficit is paid off,” according to Chichelli.

Multiply such increases by 50, and add the exponentially greater federal load, and taxpayers are looking at a grim picture.