Saturday, January 15, 2011
U.S. Bills States $1.3 Billion in Interest Amid Tight Budgets
According to Michael Cooper of the New York Times, the federal government is billing the states for the billions they have borrowed to pay unemployment benefits. They will charge $1.3 billion in interest this fall. Michigan alone owes Washington $3.7 billion and will be expected to pay $117 million in interest this fall. Michigan is just one of 30 states that owe money to the federal government for their unemployment programs. I can't help but wonder where this money is going to come from? Any ideas or comments on the topic?
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I honestly have no clue where the state of Michigan or any other of those 30 states are going to come up with this kind of money in such a short amount of time. Are these state governments forced to cut back spending elsewhere to come up with this money, and where do you start if thats the case? What happens if unemployment continues at the rate it is now, does Washington continue loaning out lump sums of money or when do they put a limit in place? If states cannot come up with this money what will happen?
ReplyDeleteAbsolute true. Where will it come from? It seems like Rick Snyder has quite the duty and issue as he steps in as Governor this month. I guess our interest payment will continue to increase since we do not exactly have 3.7 billion dollars right now. Perhaps over the next couple years when Michigan (hopefully) gets out of this horrible economic state can once again lower unemployment and pay this debt back. Just curious, anyone know what we did with this 3.1 billion and why we decided to take a loan from Washington?
ReplyDeleteThe way I see it is that we will either be forced to raise taxes and cut budgets, or we will be forced to borrow more money. Michigan has experienced some of the worst unemployment rates of the recession. Michigan's population has fallen. People are leaving to other states to find work. I'm sure, at the time, asking Washington for a loan to help the unemployed seemed like a good idea, however Michigan needs more than band-aid money to fix these problems.
ReplyDeleteIt will come from education, the arts, and social programs, same as it always does. It will come from any institution that is easy to cut money from. Public safety comes to mind as well. All will be fine of course, until we have a state full of idiots and criminals running around. Then we will be bombarded with cries about how important education and the arts are to the future of this great nation, and how the next generation of Americans is falling behind the rest of the world academically. And how public safety and education are rights that everyone is entitled to. Unless, of course, your state needs money, then it won't be that important again.
ReplyDeleteI think we should make government officials live in the projects and see how they do. Maybe then they would learn what it's like to do without, and might make more appropriate fiscal decisions.
ReplyDeleteI also wonder where this money will come from. Will the states be forced to increase taxes to pay off its interest and debt? Will education and important social programs be the first to be cut out of the states' budgets? I wish there was a light at the end of America's tunnel; but at this point, it's hard for me to imagine that we are going to dig ourselves out of this hole anytime soon.
ReplyDeleteIt seems to me that too much attention is being put on raising money from the people who don't have any to spare. Cutting such education and arts programs like Richard mentioned would simply perpetuate the poor condition the majority of the state is in already, but what other options are out there?
ReplyDeleteI say we have a big meeting with the Detroit Lions, Red Wings, Pistons, and Tiger players along with Michael Ilitch, William Davidson (MI billionaire), and the Stryker trio (combined net worth of $6.5 billion) and sit down to come up with a resolution!
I agree most with Richard. He eloquently put how a government specially one that is quite strapped for cash. The government will slash education programs and other such stuff and then also borrow money to pay back interest on the loans it has borrowed and also the loans it needs to pay back. Its a cyclical problem but then again thats how most governments function.
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