Zero Hedge – 32 States Now Officially Bankrupt: $37.8 Billion Borrowed From Treasury To Fund Unemployment; CA, MI, NY Worst:
Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states. Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance. The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.The full list of America’s 32 insolvent states is below, sorted in order of bankruptedness.
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I don’t fully understand the statistic. It shows Tennessee at $21m. Is that just $21m in general debt, or is it $21m less than annual revenue? That’s not a huge revenue shortfall for something as big as a state. Seems like a few austerity measures could fix that unless there’s something I’m missing.
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It seems to be the amount borrowed from the Feds to pay unemployment benefits. And, yeah, Tennessee isn’t in bad shape. California, on the other hand.
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If a state is paying large unemployment sums with federal money (probably backed by treasuries which are the last line of defense) it looks like that burden isn’t being lightened by the state’s own economic growth. Yeesh.
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