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U.s. Will Be Due $1.3Bn From States Over Borrowed Money To Pay Unemployment Benefits

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As if states did not have enough on their plates getting their shaky finances in order, a new bill is coming due — from the federal government, which will charge them $1.3 billion in interest this fall on the billions they have borrowed from Washington to pay unemployment benefits during the downturn.

Wait a second.....

Why did they borrow money to pay the benefits?

Oh, was this one of those scams? You know the sort - "we'll pay for something now, even though we don't have a damn clue how we're going to cover it later"?

The problem is not only the staggering number of people who have lost their jobs, but the fact that many states entered the downturn with too little money salted away in the trust funds they use to pay unemployment benefits, which they are supposed to build up in good times by taxing employers.

Why that's exactly what they did.

See, what the states have always done is taxed employers. Theoretically this money is supposed to be put aside. Well, we know what they did, right? They blew it on other things - you know, handouts of various sorts, teacher raises, cop raises, lawmaker raises, that sort of thing.

Then when the money was necessary, it wasn't there. So now we go borrow from Uncle Sugar.

Except that's a loan. With interest.

And now the interest, at least, is due.

“During this time of extreme economic stress not only on the citizens of our states, but also on state budgets, state loan interest payments that will come due in September 2011 place further hardship on states’ finances and could slow economic recovery,” a group of 14 governors from both parties wrote to Congressional leaders last month.

If you weren't jackasses and didn't steal the money, you wouldn't have the problem. You did, and you do. Suck it up and take it back from the people who you gave it to. Like state employees.

This, incidentally, has nothing to do with the handout beyond the first 26 weeks. That's a pure handout, and from the Feds.

No, this is money the States were supposed to have, as it comes from the taxes that are assessed on employers all the time. I know all about it - I used to pay that tax as an employer, and allegedly it's like an insurance fund - you pay into it, and the state is supposed to keep it for the time when your employees get laid off and need it.

What actually happened was that the states played games with the taxes (undercharging on purpose to try to lure employers to their areas) and blew the money.

Now they're crying poverty.

Pure comedy genius, national govt has lent money to local govt and expects the interest back from local govts that are bankrupt.

Still at least these states will be able to borrow the money from maybe the Fed to repay national govt back.

It's time money which is meant to be put aside is legally protected from the hands of grubby little politicians and clearly we need moral hazard, if they are tempted to fudge the accounts and steal the money politicians should be immediately jailed and forfeit all of their property and savings.

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