Wednesday, May 26, 2010

Thirty Two States Borrow to Fund Unemployment Insurance

As I have posted, the present regime is incapable of taking fruitful steps to turn any of this around. In fact, besides preventing the banking system from simply collapsing and producing an outright depression, nothing is even been attempted yet.

The actual economy is still tracking the shape of the Great Depression.  A massive loss of employment is not been remedied.  This is mostly because industry itself and the economy remains weak and possibly lacking credit and credit takes a long time to build naturally.

Again, our best and perhaps only route that can be easily inspired by government action is the housing and mortgage industry through a direct reform of the mortgage laws and the decision to backstop the whole system through the banking system.

The politicians are all pretending the problem is going away.  That is an interesting experiment and it will be curious to see how it works out.  Recall that Japan has not yet properly recovered from the collapse of 1990 and it is twenty years later.

My most pressing concern is not the steady increase in unfunded government and private liabilities because the act of creating new cash offsets those problems.  It is the ten mill or so individuals who are presently lacking employment.  Their benefits are disappearing and they are not paying any taxes at all.  Thus tax revenues are shrinking still and no one is addressing it at all.

There are solutions, but unfortunately,  Barrack Obama looks to be the least able to grasp the options of anyone, just when a president’s leadership is needed.

FRIDAY, MAY 21, 2010 has learned that 32 states have run out funds to make unemployment benefit payments and that the federal government has been supplying these states with funds so that they can make their  payments to the unemployed. In some cases, states have borrowed billions. As of May 20, the total balance outstanding by 32 states (and the Virgin Islands) is $37.8 billion.

The state of California has borrowed $6.9 billion. Michigan has borrowed $3.9 billion, Illinois $2.2 billion.

Below is the full list of the 32 states (and the Virgin Islands) that have borrowed from the federal government  to make unemployment payments, and the amounts that remain borrowed as of May 20 . (Numbers in red are billions)

Alabama      $ 283 million
Arkansas        330 million
California        6.9 billion
Colorado       253 million
Connecticut    498 million
Delaware         12 million
Florida           1.6 billion
Georgia         416 million
Idaho            202 million
Illinois            2.2 billion
Indiana           1.7 billion
Kansas           88 million
Kentucky     795 million
Maryland     133 million
Mass.          387 million
Michigan        3.9 billion
Minnesota    477 million
Missouri       722 million
Nevada        397 million
New Jersey   1.7 billion
New York     3.2 billion
N.C.              2.1 billion
Ohio             2.3 billion
Penn.            3.0 billion
R.I.              225 million
S.C.            886 million
S.D.              24 million
Tennessee     21 million
Texas           1.0 billion
Vermont        33 million
Virginia       346 million
Virgin Islands 13 million
Wisconsin     1.4 billion
Total         $37.8 billion
Posted by Robert Wenzel at 3:02 PM

1 comment:

reb said...

Borrowing to pay for social programs while tax revenue is continuing to deteriorate ??

Isn't that what Greece, Spain, (PIIGS)have done ??

Sounds like a program for disaster.