States' jobless funds are being drained in recession

[tonysam]

The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

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The idea the unemployed could simply move to another state to get more generous benefits doesn't wash; people collect only from the states where they worked.

[tonysam]

1. kick n/t

[Catshrink]

2. I think this is Reaganomics come home to roost.

It's taken this long for the effects of his tax cuts and gutting of block grants, etc. to hit. States have been able to juggle books and have been okay during up times. But now there's no money. Instead of federal subsidies to cities and states, the burden has been shifted to individual communities. This forces local entities to raise taxes and fees to provide services. These locals don't want to raise taxes and fees or risk not getting elected. When it was done in Washington, it was remote and opaque, now it's transparent. It seems that people want services but don't want to pay for them, or rather, they only want to pay for the services they want and to hell with those others need.

My 2 minute discourse on economics -- and I don't pretend to know the ins and outs, just my observations.

[Karmadillo]

3. Maybe the Pentagon will loan them some money. I hear they're loaded.

nt