{"id":1926250,"date":"2023-05-07T16:43:16","date_gmt":"2023-05-07T20:43:16","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-defaults-on-18-6-billion-debt-now-businesses-have-to-pay\/"},"modified":"2023-05-07T16:49:36","modified_gmt":"2023-05-07T20:49:36","slug":"california-defaults-on-18-6-billion-debt-now-businesses-have-to-pay","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-defaults-on-18-6-billion-debt-now-businesses-have-to-pay\/","title":{"rendered":"CA defaults on $18.6B debt, businesses must pay."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">16<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcalifornia-defaults-on-18-6-billion-debt-now-businesses-have-to-pay%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1926250&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>California Employers Left with $20 Billion Unemployment Benefit Debt<\/h2>\n<p>California borrowed approximately $20 billion from the federal government to cover unemployment benefits during the pandemic, and with Gov. Gavin Newsom\u2019s recent decision to not pay it back, employers are now saddled with the expense, according to experts.<\/p>\n<h3>State Should Have Used COVID Money to Pay Loans<\/h3>\n<p>\u201cThe state should have taken care of the loans with the COVID money it received from the government in 2021,\u201d Marc Joffe, policy analyst at the Cato Institute\u2014a public policy think tank headquartered in Washington, D.C.\u2014told The Epoch Times.<\/p>\n<p>In the proposed 2023\u20132024 budget, $750 million was allocated to start paying down the loans, but Newsom made changes to the plan in January and withdrew the funding.<\/p>\n<p>The Epoch Times\u2019 request for comment from Newsom\u2019s office was not returned on deadline.<\/p>\n<p>The decision leaves businesses in the state responsible for the loans\u2014as mandated by federal regulations\u2014so the federal unemployment tax rate of .6 percent is set to increase by .3 percent annually, starting in 2023, until the loan is extinguished.<\/p>\n<p><strong>\u201cCalifornia is just not really an employer-friendly state,\u201d<\/strong> Joffe said. \u201cThis one thing will not be a difference between a business remaining open or closing, but it\u2019s just another burden on top of the many burdens the state puts on employers.\u201d<\/p>\n<h3>California Owes the Most<\/h3>\n<p>Twenty-two states borrowed money for <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/audit-michigan-may-have-paid-billions-in-fraudulent-jobless-claims-gretchen-whitmer-administration-hit-with-kickback-allegations\/\" title=\"Audit: Michigan May Have Paid Billions in 'Fraudulent' Jobless Claims; Gretchen Whitmer Administration Hit with 'Kickback' Allegations\">unemployment insurance<\/a> from the federal government during the pandemic, with all but four\u2014California, Colorado, Connecticut, and New York\u2014paying back their debts.<\/p>\n<p>California owes the most, by far, with approximately $18.6 billion outstanding as of May 2, followed by New York\u2019s $8 billion, Connecticut\u2019s $187 million, and Colorado\u2019s $77 million, according to U.S. Treasury Department data.<\/p>\n<p>The discrepancy in amounts borrowed and owed by states lies in the different approaches to managing the pandemic, with California\u2019s stricter lockdown causing unemployment to remain higher and longer, according to experts.<\/p>\n<h3>Unprecedented Fraud<\/h3>\n<p>Initially, the state borrowed from its reserves to pay the benefits, but after exhausting its coffers borrowed to cover expenses, analysts said.<\/p>\n<p>Exacerbating the situation were unprecedented levels of fraud occurring across the state, due to limited oversight and <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/judge-who-signed-off-on-fbi-raid-was-far-more-sympathetic-when-democrat-irs-officials-30000-emails-disappeared\/\" title=\"Judge Who Signed Off On FBI Raid Was Far More Sympathetic When Democrat IRS Official\u2019s 30,000 Emails Disappeared\">antiquated computer systems<\/a>, according to Lee Ohanian, professor of economics at the University of California\u2013Los Angeles.<\/p>\n<p>Analytics firm LexisNexis estimated the total cost of the fraud at $32.6 billion.<\/p>\n<p>Investigations have since uncovered that illegitimate unemployment benefits payments were paid to convicted felons, with one <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-defaults-on-18-6-billion-debt-now-businesses-have-to-pay\/\" title=\"CA defaults on .6B debt, businesses must pay.\">address receiving 60 separate fraudulent payments<\/a>.<\/p>\n<p>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.<\/p>\n<p>The upgrade successfully stopped instances of fraud, but further improvements stopped with the end of the grant in 2016, reportedly due to the agency\u2019s reluctance to take on the annual expense for the third-party service.<\/p>\n<p>\u201cThey were penny wise and pound foolish,\u201d Ohanian told The Epoch Times.<\/p>\n<h3>Trifecta of Bad Decisions<\/h3>\n<p>At a cost of $2 million annual investment, the program would have cost $14 million to operate since it was terminated.<\/p>\n<p>\u201cSadly, this is just a trifecta of bad decisions,\u201d Ohanian said. \u201cThe [Employment Development Department] made a bad decision to not renew its lease for the fraud detection software, the state government took out a loan and chose to welch on the debt\u2014which is outrageous\u2014and now businesses are repaying more in taxes for the incredibly unwise decisions and mistakes of the state government.\u201d<\/p>\n<p>Reports that the state is seeking forgiveness from the federal government were met with resistance by policy experts, including Ohanian.<\/p>\n<p>\u201cWe\u2019ve made a lot of bad decisions and we expect the rest of the country to pay for it,\u201d he said. \u201cIt also 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?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>California borrowed approximately $20 billion from the federal government to cover unemployment benefits during the pandemic, and with Gov. Gavin Newsom\u2019s recent decision to not pay it back, employers are now saddled with the expense, according to experts. \u201cThe state should have taken care of the loans with the COVID money it received from the<\/p>\n","protected":false},"author":1,"featured_media":1926251,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[26108,6002,5487,16789,5280],"class_list":["post-1926250","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report","tag-18-6b","tag-businesses","tag-debt","tag-defaults","tag-pay"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1926250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1926250"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1926250\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1926251"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1926250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1926250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1926250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}