Posted by JM Ashby
"We never saw it coming." "No one could have predicted this crisis." "It caught us all off-guard."
Even though none of the above exclamations are true in regards to the financial crisis, assume for a moment that they are. Wouldn't the unpredictable nature of the The Market lead one to prepare for the when times are bad? If you can't predict when problems may occur, why wouldn't you prepare for when they do? No one can predict when an earthquake is going to strike, but we have building codes incase one does.
Unfortunately we do not have building codes for state unemployment insurance funds, and continuous tax cuts for businesses has lead to at least 30 states borrowing money from the evil federal government to cover their costs.
WASHINGTON – State officials had plenty of warning. Over the past three decades, two national commissions and a series of government audits sounded alarms about the dwindling amount of money states were setting aside to pay unemployment insurance to laid-off workers.
"Trust Fund Reserves Inadequate," federal auditors said in a 1988 report.
It's clear now the warnings were pretty much ignored. Instead, states kept whittling away at the trust funds, mostly by cutting unemployment insurance taxes at the behest of the business community. The low balances hastened insolvency when the recession hit, leading about 30 states to borrow $41.5 billion from the federal government to pay unemployment benefits to their growing population of jobless.
The ramifications will be felt for years.
"So be it."