Does Hutchison favor raising small business unemployment taxes?

Austin American-Statesman:

U.S. Sen. Kay Bailey Hutchison today knocked Gov. Rick Perry for not accepting federal stimulus dollars to expand unemployment benefits, signaling that she’s ready to start fighting Perry on issues head-on.

Hutchison, who is running against Perry in the 2010 Republican primary, issued a statement to the American-Statesman calling the governor’s rejection of unemployment dollars irresponsible.

“Governor Perry recklessly turned down the federal unemployment insurance money,” Hutchison said. “He never even looked at cutting the ridiculous federal strings attached to that money like I would have done. He didn’t even attempt to negotiate a way to relieve employers from a tax increase while helping Texans affected by the economic downturn.”

She pointed out that the state took billions in unemployment money to close a budget gap.

“But now, because of a purely political decision to turn down UI funding, Texas has to go into debt and beg the federal government for a $650 million loan,” she said. “And like all loans, this one has to be paid back. And who will pay it back? Texas businesses and hard-working taxpayers already facing enormous hardships.

“It’s not conservative. It’s irresponsible.”

For months, Hutchison has not clearly said whether she agreed with Perry’s decision on the stimulus dollars.

In March, Perry rejected $555 million in stimulus dollars to expand unemployment benefits. He said in an op-ed posted by the American-Statesman on Thursday, “In return for less than seven weeks of unemployment benefits, this $555 million stimulus payment would have required Texas to permanently expand its unemployment program and burden Texas job creators with higher taxes for the long haul. Those stimulus dollars would have done more harm than good for Texas workers, employers and taxpayers, which is precisely why the Texas Association of Business and National Federation of Independent Business urged and supported my decision to reject the federal unemployment stimulus funds.”

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I think Hutchison is making a mistake by not addressing the concerns that motivated Perry to reject this portion of the stimulus and by doing so she probably plays into his argument about being more connected to Washington than the concerns of people in Texas.

The article points out that the state could opt out of the program when the funding runs out, but that fails to consider the political hit. The state would be put in the position of raising taxes or taking a political hit on lowering benefits. Of course, that is exacly what the Demcorats intended when the drafted the legislation and Hutchison needs to explain why the state should fall into that trap.

While her position might have some appeal to Democrat voters, it is hard to see how it will help her in a Republican primary. I am open to an explanation.

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