California Defaults On $18.5 Billion Debt, Leaving State Businesses Holding The Bag. (22 states borrowed to survive Covid. All but 4 repaid the debt. Only Leftist's Welched : CA, NY, CO, and CN.)
Posted by freedomforall 11 months, 3 weeks ago to Politics
Excerpt:
"Little did California businesses know that they were cosigners on the state’s nearly $20 billion loan from the federal government that was used to cover California’s unemployment fund shortfall during the COVID pandemic. This ugly truth became apparent when the state recently decided to stop making payments on this loan. When a state defaults on its federal unemployment insurance loan, federal law requires that the state’s businesses repay the loan.
What makes this default even more egregious is that the stone-age-era IT system of the state’s Employment and Development Department (EDD) opened the floodgates to bad actors, permitting more than $30 billion in fraudulent unemployment claims during the pandemic. Those receiving fraudulent payments include incarcerated felons, a person impersonating a one-year-old, and a person impersonating Senator Dianne Feinstein. A single residential address received checks for around 60 separate individuals filing from that address.
This could have been avoided with a competent EDD. But this department’s performance has been deficient for decades, and California businesses, many of which are struggling, are left paying for blatant and costly mistakes that should and could have been solved years ago.
With an unpaid federal unemployment insurance loan, the federal government raises the unemployment insurance tax immediately by 0.3 percent on each business within the state, and an additional 0.3 percent each year after that until the loan is fully repaid. The normal federal unemployment insurance tax rate is 0.6 percent per year, which means that California businesses will be paying several multiples of the normal federal tax rate before the loan is retired."
"Little did California businesses know that they were cosigners on the state’s nearly $20 billion loan from the federal government that was used to cover California’s unemployment fund shortfall during the COVID pandemic. This ugly truth became apparent when the state recently decided to stop making payments on this loan. When a state defaults on its federal unemployment insurance loan, federal law requires that the state’s businesses repay the loan.
What makes this default even more egregious is that the stone-age-era IT system of the state’s Employment and Development Department (EDD) opened the floodgates to bad actors, permitting more than $30 billion in fraudulent unemployment claims during the pandemic. Those receiving fraudulent payments include incarcerated felons, a person impersonating a one-year-old, and a person impersonating Senator Dianne Feinstein. A single residential address received checks for around 60 separate individuals filing from that address.
This could have been avoided with a competent EDD. But this department’s performance has been deficient for decades, and California businesses, many of which are struggling, are left paying for blatant and costly mistakes that should and could have been solved years ago.
With an unpaid federal unemployment insurance loan, the federal government raises the unemployment insurance tax immediately by 0.3 percent on each business within the state, and an additional 0.3 percent each year after that until the loan is fully repaid. The normal federal unemployment insurance tax rate is 0.6 percent per year, which means that California businesses will be paying several multiples of the normal federal tax rate before the loan is retired."
really???