The Palmetto Insider

The blog of the South Carolina Policy Council

A Perfect Storm

leave a comment »

 

In the movie A Perfect Storm forces of nature converge to create a gargantuan, destructive North Atlantic hurricane. Here in South Carolina, the makings of a perfect storm are also brewing. This time it’s not a hurricane, but an economic storm fueled by policy failure upon policy failure.

Let’s start with the Unemployment Insurance Trust Fund, the most recent failure of government in the news. Mismanagement at the Employment Security Commission has put us, at last count, some $750 million in debt (and increasing by $2 million a day) to the U.S. Department of Labor. That’s going to cost South Carolina an estimated $1 billion – with another $1 billion needed to make the fund solvent. A rapid rise in state employment would help immensely.  But the government’s solution to this management failure will likely be to increase payroll taxes on employers – and that will lead to an increase in unemployment.  It’s basic economics.

And, how about the federal stimulus program? In 2011, a state government expanded by $700 million in federal stimulus money isn’t suddenly going shrink back to its previous size when that money goes away. And this bigger South Carolina government is going to go looking for that money.

Two programs, and we’re up to nearly $3 billion in budget holes and tax increases. That’s not counting the cost of tens of thousands of unemployed South Carolinians, nor the looming cost of multimillion dollar shortfalls in the state retirement fund.

Big businesses, politically connected businesses, in South Carolina are getting tax breaks and incentives while the real economic driver in our state—small, independent business—is paying the tab.  To find out how to let the free market restore economic health to the Palmetto State, read Unleashing Capitalism: A Prescription for Prosperity in South Carolina.

Advertisements

Written by Robert Appel

February 2, 2010 at 3:42 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: