Last month, the MSM announced that the jobless claims were less than what was predicted even though the unemployment jumped to 9.4%. But did you know that the MSM hasn’t mentioned about the jobless claims are forcing states to borrow from the Fed. Why? It is because these unemployment benefits are the obligation of each state and the piling debt is straining their own state budget.
There are fifteen states having depleted their unemployment insurance funds. It is causing them to borrow money from the US Treasury. So far, 30 of the country’s 50 states are anticipated to borrow up to $17 billion by next year. If this continues without resolution, the states will have to reject eligibility and cut benefits. The problem lies on the state-run unemployment insurance programs, which is financed via payroll taxes of the American worker. Just like Social Security, tax revenues from workers are decreasing at the same time the demands on benefits are shooting through the roof. Typically, this would have been self contained, but with unemployment close to double digits, there are not enough workers to pay for those who lose their jobs.
Do you remember the $787 billion stimulus package? In that package, Obama offered each state $7 billion to expand unemployment benefits and extend the length of time benefits are paid to 59 weeks from 26 weeks. Since this is not free, the states are required to pay back the loan with interest. Isn’t this a double edge sword the states have to face? High unemployment is causing fewer revenues to help pay the unemployed and the states have to pay back the loan with interest. How in the world will these states perform this miracle? In one way, we could see a raise in the payroll tax, but that going to get a lot of resistance. Since 46 states have a collective budget deficit totaling close to $130 billion, another way to release more money is to cut spending and we all know that is taboo to a politician.
Have you notice something? Obama liberal ideology does not work in reality. It may look good on paper and a debate, but when push comes to shove, we need to give tax cuts to everybody, including business. It is business who provides jobs with a nice salary. It is big and small businesses that help create this economy. For those idiots who believe these companies are evil need to get their head screw on straight. Obama’s distribution of wealth is killing this economy. Joe the Plumber was right when he got Obama to say those devastating words. To get out of this recession, Obama and the Democratic Congress needs to stop these stupid spending and give tax cuts to everybody to stimulate the economy. Taxing the American people during troubling times will only take us from a recession to a Depression.