Stingulus: Rick Perry and the $555 Million He Doesn't Want

Rick Perry (Photo by Jana Birchum)

As a political move, it was either a rash gamble or a shrewd move. As an act of compassion, it was downright stingy.

On Thursday, Gov. Rick Perry announced that he would reject the $555 million in federal stimulus money that Texas could have claimed for unemployment-insurance funds. Why? The policy reason is that the cash came with conditions – to claim the money, the Texas Legislature would have to broaden its definition of involuntary unemployment and accept more people into coverage. Repub­licans worry that when the money runs out, Texas will be forced to keep the expanded parameters and would get left holding the bag.

Then there's the partisan reason – government kindliness to the unfortunate never has played well with the Republican base.

"Texans who hire Texans drive our state's economic engine," Perry said in a Houston press conference. "During these tough times, Texas employers are working harder than ever to move products to market, make payroll, and create jobs. The last thing they need right now is government burdening them with higher taxes and expanded obligations. ... I am here today ... to stand with Texas employers and the millions of Texans they employ [to resist] further government intrusion into their businesses" through an expansion of our state's unemployment-insurance program.

In a press release, Perry's office explained: "Strings attached to the unemployment insurance stimulus dollars would require an unprecedented change in Texas' definition of unemployment, increasing the tax burden borne by Texas employers. This increased burden would counteract the stimulus package's objective of job creation by leading companies to limit hiring and raise prices on products, hindering their ability to overcome the economic crisis and ultimately limiting growth."

If Perry's decision turns disastrous, he can't say he wasn't warned. Tom Pauken, chair of the Texas Workforce Commission – and as former chair of the Texas Repub­lic­an Party, not exactly a wild-eyed lefty – warned last month that Texas' unemployment-insurance fund could go broke sometime this fall and encouraged acceptance of the money.

Reaction to Perry's announcement was swift. Conservative interest groups heaped praise upon the action. "Governor Perry has done the right thing for employers and employees, and Texas' economy, by rejecting the mandate-heavy [unemployment-insurance] portion of the federal stimulus package," said Michael Quinn Sullivan of Texans for Fiscal Responsibility. "Texas taxpayers don't want, and cannot afford, to have Barack Obama, Nancy Pelosi, and Harry Reid turning the Lone Star State into California or Illinois."

"[Our organization] reiterates its position today on creating programs with federal stimulus dollars that will require funding after the stimulus money is gone," read a statement from the Texas branch of the Nation­al Federation of Independent Busi­ness. "We believe stimulus funds should be used for one-time expenditures that will not require long-term commitments when the money has run out."

Liberal reaction was equally predictable: "I am amazed that Governor Perry would put partisan interests above the needs of hurting Texas families," said San Antonio Sen. Leti­cia Van de Putte, a possible Democratic challenger to Perry next year, via her Twitter feed. And the Texas AFL-CIO predicted, "If today's decision stands, employers will start paying an additional $555 million in taxes in January, courtesy of the governor, and Texas workers who desperately need help will be left to fend for themselves."

But Perry doesn't have to care what they think. His concern is playing to the hardcore conservatives that he'll count on to survive past next March's Republican primary. So the most important statement of the day came from his challenger, U.S. Sen. Kay Bailey Hutch­i­son. Her words were carefully chosen:

"I hope that the Governor has carefully thought through the potential outcomes of today's decision. With the state unemployment fund dangerously close to falling below the legal threshold, it is imperative that the Governor does nothing that potentially burdens small businesses with higher taxes in tough economic times or pushes those who have recently become unemployed and their families into further economic peril."