There is one program in the federal budget whose cost the last two years has not gone up, but down.
Unemployment compensation, which rises or falls each year with the unemployment rate, has been subsiding.
Its drop in cost has been doubly fortunate. The nation's unemployment compensation system has come under heavier strain in the 1970s than at any time since its creation in 1935, during the Depression.
The District of Columbia's unemployment insurance program is one example. Benefit costs have risen faster than tax revenues and the system has gone $64 million in debt to the Treasury.
Business groups are complaining, but the District is in no way unique.
There are 24 states and other jurisdictions whose unemployment insurance system have gone in the same way during the two recessions of the last nine years. They now owe the Treasury $4.8 billion. Pennslyvania alons owes almost $1 billion, and other large industrial states also owe large amounts.
As with Debt, so with taxes, D.C. business have been unhappy as taxes have risen to help defray costs, but the unemployment tax remains lower than in many other jurisdictions.
Nationally, unemployment compensation cost $4.2 billion in 1970, rose to a high of $18 billion in 1975, and has since started tailing off.
The main reason for the rise in cost was rising unemployment. In 1970 unemployment averaged 4.9 percent of the work force, or 4.1 million workers. In 1975 it averaged 8.5 percent or 7.8 million workers. The duration of a typical spell of unemployemtn also rose, from 8.7 weeks in 1970 to 14.1 in 1975.
A second factor affecting costs has been inflation. Benefit levels are pegged to wages, which rise more or less in step with prices. In 1972, the average weekly unemployment benefit nationwide was $55.82. This went up to $75.65 by September of last year, an increase of 36 percent. But during those same years wages in the economy generally were rising about 40 percent. Consumer prices, meanwhile, rose about 44 percent.
The average weekly unemployment benefit in the District jumped from $71.32 to $102.51 in this period - 44 percent.
That was less than the increase in such other states as Alaska and Ohio, and about the same as in Michigan.
(The average weekly benefit is higher in the District than nationally because the national average reflects wage and benefit levels in small towns and rural areas as well as big cities. The D.C. benefit is comparable those in other large cities, government experts say.)
In expanding as it did to offset the effects of employment and inflation, the unemployment compensation program was doing what it was supposed to. It is what economists call a counter-cylical program; it sustains general purchasing power when the business cycle turns down and the economy weakens.
It is also accepted that states borrow from the Treasury to keep the benefits flowing during unusually high unemployment years of the sort the country had had in the 1970s.
All the taxes that support the umemployment insurance come from business. The system is generally set up to accumulate small surpluses in good times that can be used for the bigger benefit outlays in bad times. When times are usually bad this does not work, and there has to be a tax increase.
That is what is happening now.
When Congress set up the unemployment insurance program in the 1930s, it generally left to the states the power to fix benefit levels and write eligibility rules. On the tax side, Congress required simply that, whatever the tax rate in each state, it beapplied to the first $3,000 of each covered workers' wages.
In 1972 this wage base was raised to $4,200. but that still was not enough to build up reserves adequate for the last recession, when unemployment was the highest in 35 years. Thus COngress last year passed legislation raising the wage base again, to $6,000 effective Jan. 1 of this year.
Meanwhile, many of the states were already raising their tax rates and wage bases independently, to help pay off debts from the recession and build up reserves.
In 1977, the District was charging employers 2.7 percent on the first $4,200 of wages per covered worker, up from an average of 1.33 percent just three years before.Twenty-three other jurisdictions had higher wage bases than the District's, however, and many had higher average tax rates as well.
For example, the state of Washington was charging 3 percent on $7,800. In California the avearage tax rate was 3.5 percent on $7,000; in Hawaii, 3.3 percent on $9,300; in Nevada, 3.2 percent on $6,500.
(Average rates are cited because employers whose workers made little use of the system in the past paid less than those whose workers had drawn on it heavily.)
Under the federal rules, states that improve their finiancing mechanisms suffiently - meaning those that raise taxes enough - can defer repayment of their Treasury loans if they choose.
Last year, every jurisdiction in debt to the Treasury except the District voted the requisite tax increases and won deferral. Since the District did not, employers here are being assessed an added three-tenths percent per employe to help pay back Treasury.