U.S. Starts to Call in Loans to States for Unemployment Benefits

Monday, January 17, 2011
Things are not getting any easier for cash-strapped state governments. On top of the $82 billion deficit that states collectively face, more than half of them will soon have to pay interest on billion-dollar loans from the federal government to provide unemployment benefits.
 
The massive layoffs during the Great Recession left legislatures struggling to provide assistance to the unemployed, forcing 30 states to borrow about $40 billion from Washington. Until now, the loans were interest-free…but no longer.
 
Some states, like California and Michigan, face payments of more than $300 million this year, and the money owed can’t be repaid using unemployment insurance taxes. Borrowing more money from Washington is also out of the question. Federal Reserve Chairman Ben Bernanke has said that the central bank will not bail out states confronted with staggering debts.
 
This means state lawmakers will have to take funding from other programs in order to pay back the U.S. Treasury.
-Noel Brinkerhoff
 
Bernanke Rejects Bailouts (by Jon Hilsenrath and Neil King Jr., Wall Street Journal)
U.S. Bills States $1.3 Billion in Interest Amid Tight Budgets (by Michael Cooper and Mary Williams Walsh, New York Times)

Comments

Thebes 8 years ago
This story erroneously implies that the Federal Reserve Banks are a part of the Federal Government of the United States of America. This is not the case, the 12 Federal Reserve banks are privately owned by their shareholders and overseen by a board appointed only in part by the POTUS with the consent of the senate. Bernanke is a bankster not an employee of the Federal Government.
doug 8 years ago
Makes me wonder what 'federation' the federal reserve is working or.....
mary clyde 8 years ago
If ALL 50 sovereign states seceded from the Union, would there still be a Federal government of the Dis-United States of America? If the Feds said yes, then under international law couldn't the sovereign states ask the Feds to remove their property or face its confiscation? Back to the USSA!
confused 8 years ago
They used the American peoples money for unemployment ins. Now they want the American people to pay themselves back for using their own money? Go fly a kite.

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