The disparity between what the federal government collects in taxes and what it spends was never greater than during the pandemic, when annual deficits peaked at $3.1 trillion in 2020. Even today, when the president swears Bidenomics is “working everywhere,” annual deficits exceed $1.5 trillion, and are expected to only grow. One little-noticed driver of record deficits was the extraordinary federal unemployment benefits paid during the pandemic, whose costs were added to the deficit instead of being funded by state and federal payroll taxes. With temporary pandemic programs now expired, liberal policymakers propose reviving them—and transforming key parts of the nation’s unemployment benefits system into a de facto welfare program forever.
Since its creation during the Great Depression, the nation’s Unemployment Insurance (UI) system has been framed as “social insurance.” That is, it offers eligible workers “coverage” in the form of weekly benefit checks based on their pre-layoff earnings, fully supported by “premiums” in the form of state and federal payroll taxes paid by employers on behalf of eligible workers.
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