-
The hard times are just begining and 2009 is looking to be worse. States are running out of money to pay unemployment claims. The New York Times reports
30 States’ Unemployment Funds Running Out
Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed…
It is recommended that states keep at least one year of peak-level benefits in their trusts, but many have not, and already some states are far worse off than others.
The situation puts states, many of them facing huge deficits, in an even tighter vise. As more people lose their jobs, the revenue base that the benefits are drawn from shrinks, making it harder to pay claims. Adding to that burden is that states will eventually have to pay back what they borrow…
States that come up short have the option of borrowing from the federal government, but if the loan is not paid back within the federal fiscal year, 4.7 percent interest is accrued, which cuts into states’ general funds…
As such, they are then forced to raise taxes or cut services, or both.
We’ve created this mess by having low taxes in good times and not saving for bad times.
Four at Four continues with an update from Iraq, Obama and the left, and All aboard Obama.