California Defaults On $18.6 Billion In Debt

strict Lockdowns, caused unemployment to remain higher and longer

Summarized by Chat GPT and Wayne McEachron AKA Osiris:

Epoch Times

1. California borrowed $20 billion from the federal government to cover unemployment benefits during the pandemic.

2. California recently decided not to pay back some $18.6 billion of the loan, which will fall on the shoulders of employers.

3. The federal unemployment tax rate of .6 percent will increase by .3% per year starting in 2023 until the loan is extinguished.

4. Governor Gavin Newsom withdrew $750 million allocated to start paying down the loans in the proposed 2023–2024 budget.

5. California owes the most, by far, with approximately $18.6 billion outstanding as of May 2, followed by New York’s $8 billion, Connecticut’s $187 million, and Colorado’s $77 million, according to U.S. Treasury Department data.

6. All but four of the 22 states that borrowed money for unemployment insurance from the federal government during the pandemic have paid back their debts.

7. Marc Joffe, policy analyst at the Cato Institute, criticized the state for not taking care of the loans with the COVID money it received from the government in 2021.

8. Joffe said that California is just not really an employer-friendly state and that this decision is just another burden on top of the many burdens the state puts on employers.

9. Fraudulent unemployment benefits payments were paid to convicted felons, and one address received 60 separate fraudulent payments.

10. Fraud is a persistent issue historically with the program, and a $2 million federal grant in 2013 sought to address the issue with new computer software systems.

11. The upgrade successfully stopped instances of fraud, but further improvements stopped with the end of the grant in 2016.

12. Lee Ohanian, professor of economics at the University of California–Los Angeles, estimates that the total cost of the fraud is $32.6 billion.

13. Reports that the state is seeking forgiveness from the federal government were met with resistance by policy experts.

14. Ohanian said that the state government took out a loan and chose to welch on the debt, and now businesses are repaying more in taxes for the unwise decisions and mistakes of the state government.

15. This decision raises questions about the future: If the state is going to default on the $20 billion federal loans, how safe are municipal bonds from California?



Subscribe to our newsletter to be the first to know about our new videos and updates.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form

Do you want to
Contact Us?

Contact Form