California just did what Slow Joe Biden and Senate Majority Leader Chuckles Schumer are threatening to do. Biden and Schumer still refuse to barter (allegedly) sending the US Federal government careening towards a staggering debt default. The source of each California and US Federal government fiscal problems? Uncontrolled government spending, aka, government gone wild!
Now we have now the State of California defaulting on $18.6 BILLION in debt. That is Governor Gavin Newsom (Nancy Pelosi’s nephew) bragging point to be President? Horrible fiscal management and a default?
In any case, California borrowed roughly $20 billion from the federal government to cover unemployment advantages throughout the pandemic, and with Gov. Gavin Newsom’s recent decision to not pay it back, employers at the moment are saddled with the expense, in line with experts.
“The state must have taken care of the loans with the COVID money it received from the federal government in 2021,” Marc Joffe, policy analyst on the Cato Institute—a public policy think tank headquartered in Washington, D.C.—told The Epoch Times.
Within the proposed 2023–2024 budget, $750 million was allocated to start out paying down the loans, but Newsom made changes to the plan in January and withdrew the funding.
The Epoch Times’ request for comment from Newsom’s office was not returned on deadline.
The choice leaves businesses within the state chargeable for the loans—as mandated by federal regulations—so the federal unemployment tax rate of .6 percent is about to extend by .3 percent annually, starting in 2023, until the loan is extinguished.
“California is just probably not an employer-friendly state,” Joffe said. “This one thing is not going to be a difference between a business remaining open or closing, but it surely’s just one other burden on top of the various burdens the state puts on employers.”
Twenty-two states borrowed money for unemployment insurance from the federal government throughout the pandemic, with all but 4—California, Colorado, Connecticut, and Latest York—paying back their debts.
California owes essentially the most, by far, with roughly $18.6 billion outstanding as of May 2, followed by Latest York’s $8 billion, Connecticut’s $187 million, and Colorado’s $77 million, in line with U.S. Treasury Department data.
The discrepancy in amounts borrowed and owed by states lies in the several approaches to managing the pandemic, with California’s stricter lockdown causing unemployment to stay higher and longer, in line with experts
And CA CDS 1Y is tame (only 31), the CDS curve over an extended timeframe looks miserable.
Now, Gruesome Newsom only default on Covid-related loans. The California municipal bond market is large and CA has defaulted on those loans …. yet.
Speaking of insane fiscal “management,” a repartations plan in California could cost billions.
California’s reparations task force, which first convened nearly two years ago, has given the ultimate approval to a listing of recommendations on how the state may compensate and apologize to Black residents for historical discrimination.
“Reparations are usually not only morally justifiable, but they’ve the potential to deal with long standing racial disparities and inequalities,” Representative Barbara Lee (D-CA) said during a weekend meeting. The proposals now go to state lawmakers to contemplate reparations laws and a final sum, which some economists could cost the state upwards of $800B, or almost 3x the state’s annual budget.
To be initially eligible, applicants should be a descendant of Black individuals who were within the country by the top of the nineteenth century, thouqh there are usually not yet details on how the payments could be funded. Age, state residence, and other aspects will even play a job in determining compensation.
There may be the rub – how does California finance the reparations? Raise taxes (unfair to individuals who never did anything incorrect to blacks)? Borrow billions? Provided that Newsom just defaulted on loans to California might mean that there will likely be relucatance to lend CA billions more.
CA Governor Gavin “Slick” Newsom. The Defaulter In Chief of California.
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