The economy might be on it’s way back from the deathly hallows created by the Bush administration, but we’re definitely not out of the woods yet.
As of this week, more than half the States owe the federal government millions – and in some cases billions – of dollars for unemployment benefits they’ve paid out after their local unemployment budgets ran out. The highest of these is California, which owes the federal government $8.7 billion; while the lowest, Delaware, owes the Fed $21.1 billion.
Businesses traditionally cover the cost of state unemployment insurance and up to 20 weeks of federal benefits, which kick in when a state experiences high levels of joblessness. At issue now are a third level of emergency benefits — lasting up to 53 weeks — first authorized by Congress in mid-2008.
Soaring unemployment has drained the state accounts that typically fund jobless benefits, forcing many states to borrow money from the federal government to cover their payouts. Currently, 31 states have $41 billion in loans outstanding.
What’s worst is that this balance isn’t half of what the Federal government has paid to unemployed American’s this year. And the federal government’s total bill wasn’t even half of total unemployed people received in benefits this year.
Unemployed Americans have collected $319 billion in jobless benefits over the past three years due to the federal government’s unprecedented response to the Great Recession, according to a CNNMoney analysis of federal records.
The federal government has already footed $109 billion of the bill, and lawmakers are super-sensitive to adding further to the deficit. But advocates are turning up the pressure to extend the deadline to file for federal benefits.
The scariest part of this unemployment issue is that since businesses are going to have to cover most of the debt created by unemployment, a lot of them are hesitating to hire new employees because of the financial burden.
Hell of a catch-22.