Officials Differ On Pump Priming

December 13, 2002
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LANSING — In a stifled economy, state officials are looking for ways to boost spending and get money flowing, but they differ on which actions should be taken.

Gov.-elect Jennifer Granholm has made it clear that she supports a raise in the weekly rate of unemployment benefits in Michigan, and groups such as the Michigan State AFL-CIO agree that benefits should increase.

Others, such as the Michigan Chamber of Commerce, disagree, saying the focus should be on job creation, not increased unemployment benefits.

Earlier this year, legislation passed to increase the top weekly rate of benefits to $375, up from $300. But AFL-CIO President Mark Gaffney said that's not enough.

"Our position is that it should be $415," he said. "That's what it would be if it had been indexed to inflation since 1997, when the rate was frozen."

In every state, employers pay an unemployment tax into a trust fund from which benefits are distributed. Gaffney said that tax has been cut seven years in a row in Michigan.

"Absolutely there are funds available to raise the top rates and the lower rates, too," he said.

Chris De Witt, a press secretary for Granholm, agreed that funds are available and that raising the weekly benefit rates is one way to stimulate the state's economy, allowing more money to move and be spent.

"Putting it in the hands of people who will spend it will help move things along," De Witt said. "The money is there and the system is solvent.

"Let's face it, these folks need help. We can do better than we're doing."

But Rich Studley of the Michigan Chamber of Commerce, said job creation and reduction of income taxes are better goals for helping the unemployed.

"We feel it's unnecessary to revisit this issue," said Studley, a senior vice president for government relations. "Our focus for the upcoming year will be to work with the business community and the incoming administration to get people off the unemployment roll and into jobs where they can earn higher wages.

"The unemployment insurance issue was adequately discussed earlier this year. It's time to move on."

Studley said the chamber also will work with Gov. John Engler and legislators during the lame-duck session to balance the state's budget without raising taxes and to replenish the state's rainy day fund.

As part of the transition process, Studley said members of the chamber were invited by the transition team to take part in policy groups and that unemployment issues probably will come up as a part of the transition from Engler to Granholm.

"Granholm has talked about the need for creative thinking and the need to think outside the box," Studley said. "We probably won't always agree with her, but we're very optimistic for Michigan.

"The focus (on raising rates) is counterproductive. If you're a worker, do you want a good job or higher unemployment benefits?"

Gaffney said with the closing of unemployment offices, people have to rely on telephones and computers to apply for unemployment, technology that some people don't have access to.

"One thing the new governor should look at doing is change the way we link unemployed people to available jobs," Gaffney said. "There's a matter of qualification, and we have to have a walk-in center for people without computers."

Gaffney said lawmakers will discuss unemployment benefits in the coming year, but he is unsure about the chances of legislation passing.           

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