According to data from the US Treasury, California owes the most debt at $18.6 billion and has defaulted on it.
California’s recent decision not to pay back some $20 billion borrowed from the federal government to cover unemployment benefits during the pandemic will fall on the shoulders of employers, according to experts.
“The state should have taken care of the loans with the COVID money it received from the government in 2021,” said Marc Joffe, policy analyst at the Cato Institute—a public policy think tank headquartered in Washington, D.C., in a statement to the Epoch Times.
In the state’s proposed 2023-2024 budget, $750 million was allocated to start paying down the loans, until Governor Gavin Newsom nixed the provision in early January, leaving businesses in the state responsible for the loans, as mandated by federal regulations – so that the federal unemployment tax rate of .6 percent will increase by .3% per year starting in 2023 until the loan is extinguished.
“California is just not really an employer-friendly state,” said Joffe. “This one thing will not be a difference between a business remaining open or closing, but it’s just another burden on top of the many burdens the state puts on employers.“
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In total, 22 states borrowed money for unemployment insurance from the federal government. All but four, California, Colorado, Connecticut, and New York, have paid back their debts – with California owing the most by far at $18.6 billion as of May 2, followed by New York at $8 billion, Connecticut at $187 million and Colorado at $77 million, according to data from the US Treasury.
With the national debt of the world’s reserve currency soon expected to exceed $32 trillion, some are predicting a potential $20 trillion dollar global financial collapse.