The Obama administration is proposing to help states with their unemployment insurance debt. The White House also proposes to raise taxes on employers down the road to help states pay back their borrowing, the Associated Press reports.
Thanks to the jobs crisis, states have had to borrow money from federal sources in order to meet their unemployment insurance obligations. Thirty of them now owe the federal government a combined $42 billion. Some states have already raised taxes to start paying back the money they owe, and others will start doing so soon.
The Obama proposal, to be included in the White House's budget plan next week, would place a two-year moratorium on state tax increases to cover the jobless aid, and halt state interest payments on the debt over the same period. But starting in 2014, the White House plan also would raise the taxable income level for unemployment insurance from $7,000 to $15,000—a burden that employers would carry.
The Obama administration says the plan will ultimately speed up the timeframe for states to reimburse their federally subsidized jobless benefits.
This morning, we reported that nine states have so far declined to accept nearly $1 billion in federal funds for jobless benefits, because doing so could produce a modest short-term impact on state and local budgets, via payments to laid-off state workers.
(AP Photo/Paul Sakuma: Unemployed people wait in line at the California Employment Development Department in San Jose, Calif.)