President Bill Clinton's Labor Department, against the advice of its own lawyers, is completing new regulations that will allow the federal government to raid the state unemployment trust funds.
The scheme behind the diversion of funds is to fund paid leaves for people who take advantage of the Family and Medical Leave Act.
That act, as passed by Congress in 1994, has been a good law. It has allowed employees to take unpaid leave for medical emergencies and family leaves. When it was passed, however, it was with the clear understanding that the leaves would be unpaid and that small businesses would be exempted.
As the result of good economic times and relatively few layoffs many states' unemployment insurance funds are solvent, making them a plump target for Clinton and bureaucrats who see a way to make some political hay. Politicians who see a pile of money accumulating immediately start thinking of ways they can spend it. It's a reflex action.
One doesn't need a terribly long memory to remember the days of high unemployment. There's no assurance that the U.S. economy won't take a downturn in the future.
The Labor Department's own attorneys have counseled that such a regulation would require legislation, but the initiative for paid leave has rolled on despite the protests. The Wall Street Journal reported that the Labor Department told Congress in 1997 that "to serve its purposes, unemployment insurance, 'must be paid only to workers involuntarily unemployed.'" A 1990 Labor Department memo said the courts would strike down a mere regulation.
There's no question that if states took advantage of this proposed regulation change many unemployment trust funds could be endangered. And if those funds dropped too low government would no doubt raise employers' payroll taxes to make up the difference.
Congress shouldn't wait for the courts. This is the time to raise a ruckus and bring political pressure about the proposed regulations. If it takes a congressional inquiry into the administration's overstepping its bounds, so be it.
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