North Carolina Is Ground Zero for Unemployment Extension Fallout

While the debate over an unemployment extension continues in Congress, Tillis helped cut the duration of North Carolina unemployment benefits to the shortest in the nation. (Bill Clark/CQ Roll Call File Photo)

With Congress showing few signs of passing an unemployment extension in 2014, North Carolina's tossup Senate race will be a key test of the issue's political potency.  

Democratic Sen. Kay Hagan and her Republican challenger, state Speaker Thom Tillis, have taken sharply different stands on unemployment benefits, and the issue could cut both ways.  

Hagan backed the Senate's unemployment insurance extension, and inserted a provision to restore federal benefits to North Carolina workers.  

She's attacked Tillis for taking a lead role slashing the benefits in North Carolina — now the least generous in the nation — while he credits the cut, in part, for the state's shrinking unemployment rate.  

"It's no coincidence given our tax, regulatory and unemployment reform that we continue to see a significant drop in unemployment and are able to add jobs for our citizens," he said in May .  

The North Carolina General Assembly cut state unemployment benefits to 19 weeks last year to help pay down the state's debt. And beginning on July 6, anyone who applies for unemployment benefits will be able to collect for a maximum of 14 weeks, versus 26 weeks in most other states.  

The state legislature also cut the maximum weekly payment from $535 to $350.  

The cuts last year made North Carolina workers ineligible for extended federal unemployment benefits, something Hagan sought to fix.  

"This bill includes my provision to restore federal unemployment insurance for North Carolinians who have suffered as a result of a reckless law passed by the General Assembly, which knowingly and willingly violated federal law," she said when the Senate unemployment extension was unveiled in March.  

Tillis, for his part, has accused Hagan of not securing an exemption for North Carolina in the fiscal cliff deal to allow the state to cut benefits while still receiving the federal extension.  

The five-month federal unemployment extension passed the Senate in April, but has been blocked by House Republicans. Its benefits now would be purely retroactive, given they expired on May 31. Senate backers are now considering long-shot moves to get the House to act, like tying an extension to a highway bill.  

For Democrats, it's one of the many issues Hagan has used to attack Tillis' conservative legislative record in the state House.  

"There is an absolute percentage of the base where the unemployment issue is a home-run issue," said North Carolina Democratic consultant Morgan Jackson.  

But for most Democratic voters, unemployment insurance on its own will not be enough to get them to the polls.  

State Sen. Floyd McKissick Jr., a Democrat from Durham and the deputy minority leader, said unemployment insurance will be part of a larger pantheon of issues, such as abortion access and Medicaid expansion under the Affordable Care Act.  

"I think it's one of many things that will galvanize people to come out, but it won't be the sole thing," McKissick said. "You saw 130,000 people that were receiving those long-term benefits that were just dropped. ... They were hurt. So for many of those individuals, they will recall what happened and they will relate it back to the broader issue of what's going on in North Carolina in terms of regressive politics."  

Ferrel Guillory, a professor of political science at University of North Carolina, agreed.  

"It's part of a package of issues that draw a distinction between the Republican way of government that Tillis represents and the Democratic way of government that Hagan represents," he said.  

Hagan's campaign frames it as a "contrast between Kay's priorities and record of working to get results, and Thom Tillis' agenda which is in line with what the special interests want," said campaign communications director Sadie Weiner, before dropping a reference to the billionaire Koch brothers.  

"I think it's an important part of a narrative for Democrats," said Senate Majority Whip Richard J. Durbin, D-Ill., along with other parts of the Democrats' "fair shot" agenda such as college affordability, pay equity and the minimum wage. "I think all those are part of the same story about struggling working families, some of them out of work, and the fact that the Republicans have said 'no' consistently."  

But the unemployment insurance issue could also help fire up the Republican base in North Carolina, and Tillis is not shying away from it.  

The unemployment rate in North Carolina has fallen from 8.6 percent in January 2013, to 6.2 percent, below the national average. Though North Carolina Democrats argue that the main reason the unemployment rate is falling is that people are dropping out of the workforce — often because they have been kicked off unemployment benefits.  

Republicans proudly tout those numbers and credit their legislative policies.  

"With the help of Thom Tillis' pro-growth policies, including historic tax and regulatory relief, North Carolina has seen one of the highest rates of job growth over the last several months, and the state's unemployment rate is at its lowest level in five years," said Tillis spokesman Daniel Keylin.  

Republicans also said the cuts were needed to help pay down a $2.8 billion debt to the federal government that had been racked up to pay for more generous unemployment benefits when Democrats — including Hagan — controlled the legislature.  

The fact that Tillis made those cuts, said Dallas Woodhouse, a North Carolina Republican and president of Carolina Rising, will help him show Republican voters he's willing to make tough choices to cut spending.  

"Legislative bodies tend to kick the can down the road 'til there's no more can and no more road," Woodhouse said. Republican voters "will probably look at it favorably … as Tillis being willing to do something difficult," he said.  

"In a base mobilization election, it will serve both sides to mobilize their base, but I believe it'll mobilize Thom's base more," he added.  

Sen. John Thune, R-S.D., the Republican Conference chairman, said Senate Republicans are happy to have the argument over unemployment benefits.  

"To me the real answer to all of this — and this is what our candidates are going to be talking — is the best solution is a good paying job," Thune said. "They want to treat the symptom and we want to treat the cause."