Michigan is one of many states that have had to borrow billions of dollars from the federal government to keep up with the cost of unemployment benefits over the last few years as joblessness has skyrocketed. Now they also face having to pay back those loans at a time when their budgets are busted.
But the Obama administration may be taking steps to help the states in this regard. The Detroit News reports:
Under the proposal — first disclosed by the Associated Press — the White House would impose a moratorium in 2011 and 2012 on state tax increases and state interest payments on the debt.
But in 2014, the administration will propose to increase the taxable income level for unemployment insurance from $7,000 to $15,000.
This would be a good deal for Michigan. Our Republican-controlled legislature isn’t going to pass any sort of tax increase for unemployment compensation anyway, but the moratorium on interest payments would help avoid $150 million a year in budget cuts that would be necessitated by the loan payback over the next two years.
Michigan owes almost $4 billion to the federal government for those loans.