California Borrows $40M a Day From Federal Government to Pay Unemployment Insurance
Posted by Jim Hoft on Monday, November 8, 2010, 5:25 AM
The not-so-Golden State is borrowing $40M a day from the federal government to pay for unemployment benefits. Currently one of eight workers is unemployed in California.
The AP reported:
With one in every eight workers unemployed and empty state coffers, California is borrowing billions of dollars from the federal government to pay unemployment insurance.
The Los Angeles Times reports that the state owes $8.6 billion already, and will have to come up with a $362-million payment to Washington by the end of next September.
The continued borrowing means federal unemployment insurance taxes are going to increase, upping the annual payroll costs $21 a year per worker.
California tops the list of 32 states that have borrowed a total of $41 billion to pay claims.
The state took out its first loan from the federal government early last year, to deal with rising payment of benefits and number of claims.
More… California, the Lindsay Lohan of States, is headed for trouble again, and it shouldn’t expect a bailout.
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Published May 24, 2012 at 8:46 pm - 91 Comments
Granny commented:
How is anyone surprised by this? California has been bleeding jobs and industry for years now and seem to do everything in their power to make sure they do not recover – like the fiasco with the chicken cages mandated by the voters a couple of years back that drove poultry farmers out of state or out of business.
California is so desperate that they are even advertising up here in Vermont, trying to entice us to California. Must think we’re really stupid!
Bill Fabrizio commented:
Let me see if I’ve got this straight; the absolutely bankrupt state of California is borrowing $40 million per day from the absolutely bankrupt US federal government to pay unemployment benefits to the absolutely bankrupt and unemployed citizens of California.
If this isn’t insane enough, that same absolutely bankrupt state of California re-elected a democratic governor, senator and legislature, all of whom are committed to blind pursuit of the same policies that led to California and the US government’s insolvencies and which put all the California citizens out of work in the first place.
Yup, I think I got it straight! Adios California!
olm commented:
40 million a day?
I would love to see a list of other states borrowing.
How can a broke entity borrow from a broke entity?
tarpon commented:
And here we thought illegals were the backbone of the economy. If it were …
Harry Schell commented:
The feds are the lender of last resort, and they are the only ones dumb enough to fund CA.
IL, NY and other states are borrowing or getting subsidies from the feds in excess of their state tax revenues to hide deficits…but the silliness and public employee-Democrat combine have created a monster that has to die a flaming death before it will be replaced.
Sasja commented:
Insane! The Economic Policy Journal has the list (Tried to link but didn’t work). My state wasn’t on it and it better not be. Our unemployment has teetered between 6.5 and 7.0 with a slight dip last month. With more jobs coming, should see a little dip again.
retire05 commented:
Next on Jerry Brown’s agenda? Get the Feds to wipe out those loans by forcing the other states to pick up the tab.
Brown is now going to see the bleeding, up close and personal. Governor Rick Perry said this weekend that in 2010 alone, 153 California companies have relocated to Texas. Now he’s going after New York companies (“If you go fishing, you go where the fish are” Rick Perry) and you can bet, he will make them an offer then can’t refuse.
These states can’t continue to operate in the red and expect to ever be able to pull themselves out of the hole they have dug. So…….. what happens when California and New York go to Washington and do their Monica Lewinsky imitation (on their knees) with Obama begging for a bailout?
Will the other states take a stand and demand that the losers be responsible for themselves? I certainly hope so.
8 My Foot commented:
I wonder how many of those 1 in 8 are illegal aliens.
arnonerik commented:
“How can a broke entity borrow from a broke entity?”
They can do it because one of those entities (the Federal Government) has the ability to print money as needed. So the truth is we are already bailing out California with the future earnings of our children. And now you know why California votes for Democrats. They can be trusted to keep the bailout money coming until the whole country goes economically down the tube.
Sasja commented:
I also don’t need to remind everyone that the “Feds” are the American taxpayer. We have government entities spending far too much of our money and to top it all off, they blame us for not paying enough in taxes to cover their out of control spending. Meanwhile, they’ll vote themselves raises, have us pay for their retirement and all their perks. Just wait until next year when we have to dole out all that money to those who qualify for that idiotic income tax credit crap. That list should have tripled by then.
Ripped commented:
And yet the morons who live in California continue to re-elect the same buffoons who got them into this mess. The people of CA are getting the government they deserve.
BurmaShave commented:
NB: $40M/day = $1B every 25 days = $14.6 BILLION / year
California is hopelessly bankrupt. The other 49 states cannot afford to support the BIGGEST PIG IN THE COUNTRY AND ITS LIBERAL ADDICTIONS.
California is going to bankrupt the rest of us.
Billy Jack commented:
This is what one might call a bail out. You can call it whatever you want, but it is a bail out. Why do all the rest of us have to pay the price for these individual states who cannot balance a budget or control spending?? It is bad enough we have to pay for the federal government’s out of control spending, but now we have to pick up California’s tab also???
mark commented:
Many of us CA conservatives have been left scratching our heads since election day. (We have no voice left in CA.) The rest of the nation has been asking “What were they smoking?” You know the answer to that.
Here are a few stats from NCPA worth reading.
YOU CAN HELP BY DEMANDING CONGRESS END SUBSIDIZING IRRESPONSIBLE STATE BEHAVIOR. CUT OFF THE WAYWARD LIBERAL CHILDREN’S CREDIT CARDS AND THEY WILL GROW UP. WHY SHOULD RESPONSIBLE CITIZENS PAY FOR THE DRUNKEN SPENDING OF THE LIBERAL FEW?
How bad has it gotten in the erstwhile Golden State? Consider:
* Some 2.3 million Californians are without jobs, for a 12.4 percent unemployment rate — one of the highest in the country.
* From 2001 to 2010, factory jobs plummeted from 1.87 million to 1.23 million — a loss of 34 percent of the state’s industrial base.
* With just 12 percent of the U.S. population, California has almost a third of the nation’s welfare recipients; meanwhile, 15.3 percent of all Californians live in poverty.
* The state budget gap for 2009-2010 was $45.5 billion, or 53 percent of total state spending — the largest in any state’s history.
* Unfunded pension liabilities for California’s state and public employees may be as much as $500 billion — roughly 17 percent of the nation’s total $3 trillion at the state and local level.
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More from NCPA
What this panel and so many other investors fail to appreciate is that state bailouts have already begun.
* Over 20 percent of California’s debt issuance during 2009 and over 30 percent of its debt issuance in 2010 to date has been subsidized by the federal government in a program known as Build America Bonds.
* Under the program, the U.S. Treasury covers 35 percent of the interest paid by the bonds.
* California is not alone: Over 30 percent of Illinois’s debt and over 40 percent of Nevada’s debt issued since 2009 has also been subsidized with these bonds.
Beyond debt subsidies, general federal government transfers to states now stand at the highest levels on record. Today, more than 28 percent of state funding comes from federal government transfers, says Whitney.
These transfers have made states dependent on federal assistance.
* New York, for example, spent in excess of 250 percent of its tax receipts over the last decade.
* The largest 15 states by gross domestic product spent on average over 220 percent of their tax receipts.
http://www.ncpa.org/sub/dpd/?Article_Category=40
Billy Jack commented:
This is just an incentive to NOT balance your books knowing the fed’s will pick up the tab.
befuddled commented:
so it’s official, we are already bailing California out. but 40 mil/day is chump change compared to king obama’s working vacation of 200 mil/day to create union jobs. you know, the same union that took 26 billion away from us a couple of months ago right before the election so they could turn around and spend 56 million to reelect the corruptocrat democrats back into office. seems to me, the only job obama cares about saving or creating is union jobs. at least king obama knows his base.
RickS commented:
These people need to move. Period. I am sick and tired of footing the bill for these freeloaders who want to live it up in the fun and sun of California. I’m out here in Wyoming and businesses out here are begging for workers. The next Congress must cut off this funding. This is an absolute travesty.
Chisum commented:
Calif. Receiving Backdoor Federal Bailout?
FBN’s Tom Sullivan on the state funding a significant portion of its budget through ‘Build America Bonds.’
http://video.foxbusiness.com/v/4403614/calif-receiving-backdoor-federal-bailout
Hedgehog commented:
This is what is called a bailout. Who do you think is going to have to pay for this. The federal government is loaning California money that is borrowed from someone else. The taxpayers and their children are on the hook for this one way or another. It’s the same principle as the affordable housing scam. Loan money to people who can’t pay it back, and stick the taxpayers with the bill. Notice that the federal government is not asking for anyone’s approval for this. They are just doing it because “it’s the right thing to do”. It’s called “spreading the wealth around”.
Rock commented:
Kind of explains Pelosi and her need to remain a power broker in The House. And another excellent reason to extent the tax cuts, I absolutely do not want any portion of my tax bill spent on the corrupt policies and politicians of the must fiscally and morally bankrupt state in the nation. They made their bed, now let them lay in it.
Note to Californians, want my help and dollars rid the nation of the the likes of Pelosi, Boxer, and Waters.
Dave-O commented:
Our newly-elected representatives in Washington need to shut off the spigot. Now.
John Gargano commented:
THINK THIS THROUGH!
Worse than these “loans”, their State deficit is projected to hit $13.4 billion by the end of next year and $16 billion in 2012.
They have no money to pay back these “loans”. Can you see the handwriting on the wall – Obama will soon propose to forgive these loans.
They want to live in a liberal utopia (denial), – but WE are paying for it – Lets let THEM pay for it!
PLEASE – write BOTH of your US Senators and your US Congressional Representative TODAY and tell them to STOP this madness immediately and NEVER allow CA to default on these loans – make them keep these amounts owing on their books eternally until they pay them off, in full, with interest!
billy sol commented:
Cut these morons off; they need money? get it from fidel, or hugo!! they elected the people that put them in this mess, and then the re-elect them. californians get no sympathy from me!!!
anonymous commented:
The state of California needed to pay the government the money back.
iconoclast commented:
Let California rot in its own budgetary mess. The state was stupid enough to elect the politicians who got them into this mess, let them suffer the consequences.
No more federal bailouts of California.
Callipygian1 commented:
Arizona should boycott their share of payments to California
Valerie commented:
This isn’t entirely new: they’ve been paying their teachers with IOUs from time to time.
I moved to San Diego a bit over a year ago, and there’s not much wrong with this city, although I’d not be happy in San Francisco. This city and state do have high taxes, but San Diego has marvelous public works and schools: they get a lot of bang for their buck.
There are two things that the California legislature could do to help its economy: pass a right-to-work law, and re-set the tax code to reduce volatility in the state budget.
The public employee unions have made a mess of the budget and the school system. And they don’t really represent the best interests of their constituents. A right-to-work law would not eliminate the unions, but would make them more accountable to their membership.
The tax code is extremely volatile because the taxes are skimmed off the very top of the income bracket. Much of that tax bracket has vanished over the last 5 years. The schools are 40% of the state budget, and the legislature micromanages it by mandating programs that account for about 75% of the local school budgets.
As a practical matter, this means that the schools don’t know how many teachers they will have until 3 weeks into the school year.
As a practical matter, massive amounts of time at all levels have been spent on figuring out the budget every year. It’s a huge, grinding waste that chews up school superintendents, not to mention the school boards.
And the teachers’ union, for example, has been able to insist that lay-off decisions be made purely on the basis of seniority, not any measure of effectiveness in teaching.
The state needs to draw from more stable sources of funding, and if it does that, it will have to exert some fiscal discipline and creativity, but the outcome will be greater satisfaction for all involved.
Jarhead commented:
In my darker dreams, the new House will stop the creeping bailouts of states, which results in Calif., NY and Ill. becoming failed states which no longer function, and life in those states (for about a quarter of the US population) becomes chaotic beyond our imagination. Obama then declares a national emergency, and suspends both the Congress and the 2012 election.
Just_Saying commented:
End federal income taxes and entirely defund the federal government. Then, bit-by-bit, re-fund legitimately federal things that are affordable.
.
muffler commented:
Last I remember a Republican was governor for the last 8 year or so.
Ladue Pundit commented:
Last I remember a Republican was governor for the last 8 year or so.
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Sacramento is Democratically controlled and veto-empowered. The Guvernator is a RINO married to a Kennedy, so what’s your point?
Stuart commented:
muffler #31
Arnold was a Republican? You couldn’t prove it by me.
Ruebacca commented:
I voted for Schwarzenegger and got Governor Schriber.
Just to reinforce the other California Conservatives. I live in the bay area and these people are completely ignorant. They don’t deserve help and I am happy the final collapse will be under Brown.
24AheadDotCom commented:
The WSJ link provides yet more evidence that you can’t trust “fiscal conservative”/libertarian/teaparty types.
The WSJ is on the wrong side of immigration, and their ideology has led to many of CA’s problems: it causes citizens to leave the state, it raises spending, and it gives even more power to the free-spending far-left.
And, they won’t acknowledge the role their ideology has played.
danrobdds commented:
I like the notion that the new CONSERVATIVE leadership of congress and the federal government will not bail out Ca, but will HELP CA go through bankruptcy with the stipulation that 1) all current contracts including those contracts and agreements with the state’s employee’s unions be terminated or modified and 2) that entitlement programs be reviewed and reduced by at least 30 % in such a way as to return CA to fiscal responsibility and solvency. That means that the currently unsustainable wages, benefits and retirement programs of the bloated role of state employees would have to be terminated and renegoiated and that those on the public dole have a limited time (2 years) that they can draw wefare benefits. The “worker bees” are being taxed to death and rightly so are choosing to leave the state. When the worker bees are gone, who will CA have left to tax? Answer: no one; they’ll just ask the federal government to bail them out. Welcome to Calimexico!