California refuses to pay its debt to the US federal government

According to the report of the International Economic Group of the Fars News Agency, citing Russia Elium, the American media reported that the state of California defaulted on the debts of 18.6 billion dollars that it borrowed from the federal government to cover unemployment benefits during the Corona epidemic.

In the proposed 2023-2024 budget, $750 million was earmarked to begin paying down the debt, but Democratic California Gov. Gavin Newsom made changes to the plan in January and decided not to pay it off.

Under the California governor’s decision, corporations in the state became responsible for repaying the loans, as stipulated in federal regulations. Therefore, the federal unemployment tax rate, which is set at 6%, will increase by 3% annually from 2023 until the loan is repaid.

“The state of California should have taken care of the Covid-related money it received from the state in 2021,” said Mark Goffey, an analyst at the Cato Institute, a public policy think tank based in Washington. “It’s not really an employer-friendly state.”

Twenty-two US states borrowed unemployment insurance money from the federal government during the pandemic, and most states paid off their debts with the exception of four states: California, Colorado, Connecticut, and New York.

California has the most debt with about $18.6 billion due as of May 2, followed by New York at $8 billion, Connecticut at $187 million and Colorado at $77 million, according to U.S. Treasury data.

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