Sixteen states have or are about to cut their unemployment insurance taxes by hundreds of millions of dollars. They apparently believe that a deep recession and mass layoffs are not in the cards in the foreseeable future. In fact, their plans seem to grow from the belief, voiced by President Clinton and others, that the U.S. economy has moved beyond the boom-and-bust cycles of the past.

• Seven of the states are in the South -- a region which has added jobs at a rate far above the national average.

• In the period 1994 to 1996, Americans generally paid 0.7 percent of their income in unemployment taxes.

• In those Southern states which are cutting their taxes, the rate is 0.6 percent in South Carolina and Tennessee, 0.5 percent in Florida, Georgia, Mississippi and Virginia, and 0.2 percent in North Carolina.

Some unemployment insurance specialists are wary of the trend, saying the states would be ill-prepared to handle a flood of claims the next time the economy turns down.

Proponents of the cuts argue that returning the money to the local economy would fuel growth, providing capital for business expansions.

Employers pay into unemployment insurance compensation funds based on the size of their workforce, the number of layoffs at each company and the size of their state's fund. The funds are designed to grow with a strong economy and be drawn down in a recession.

Source: Greg Jaffe, "South Takes Aim at Jobless Insurance Tax," Wall Street Journal, January 27, 1997