USA ignored warnings on unemployment insurance

State officials had plenty of warning. Over the past three decades, two national commissions and a series of government audits sounded alarms about the declining number of states were setting aside money to pay unemployment insurance for workers made redundant.

"Trust Fund inadequate reserves," the federal auditors said in a 1988 report.

It is now clear that the warnings were almost ignored. In contrast, states keep dismantle the trust funds, especially by reducing taxes for unemployment insurance at the request of the business community. Low balances quickly insolvency when the recession hit, which takes about 30 states to borrow $ 41,500,000,000 federal government to pay unemployment benefits to its growing population of unemployed.

The impact will be felt for years.

In the short term, states must find the money to pay the interest on loans. Usually involving a special tax on business until the loan is paid. Some states could benefit from general revenues, making it more difficult to pay for schools, roads and other public services.

In the long term, the state will have to replenish their unemployment insurance programs. That usually leads to payroll taxes higher, leaving companies with less money to invest.

recessions in the past have led to insolvency. Seven states borrow money in the decade of 1990, eight did so as a result of the 2001 recession.

But the figures are much worse this time because of the recession was more severe and the funds were already low when he arrived, said Wayne Vroman, an analyst at the Urban Institute, a liberal-leaning think tank based in Washington.

The Obama administration this month proposed giving states an exemption in the payment of interest on this fall. By the way, the administration increases the amount of wages that companies pay the federal unemployment tax. Many states are likely to follow his example as a way to boost depleted trust fund.

Companies pay a tax on federal and state payroll. The federal tax mainly covers administrative costs, the state tax paid by the regular benefits of a worker when they parted. The Treasury Department manages the trust funds of tax for each state.

Each state decides whether the unemployment fund has enough money. In 2000, total reserves of the states and territories came to about $ 54 billion. That was reduced to $ 38 million at the end of 2007, as the recession began.

During the next two years, the reserves fell to $ 11.1 million, lower than any time in program history when adjusted for inflation, the Government Accountability Office said in its latest report on the subject. However, the benefits have remained relatively flat or decreased in comparison with the average weekly wage.

"If you look from the employers point of view, no reservations will want to build too high, because then there is a growing risk that the advocates of expansion would benefit reserves point to high and say, 'We can see the afford to increase profits, "said Rich Hobbie, Executive Director of the National Association of State Workforce.

A review of government programs for unemployment insurance shows how states weakened their trust funds in the last two decades.

In Georgia, lawmakers gave employers a tax holiday of four years from 1999 to 2003. Employers saved over $ 1 billion, but reserves to the trust funds declined 40 percent to $ 700 million. The state has progressively increased its unemployment insurance taxes since then, but not enough to restore the trust fund to previous levels. The state began borrowing in December 2009. Washington must now about $ 588,000,000.

Republican Mark Butler, Georgia labor commissioner, said his state had the lowest unemployment insurance tax in the nation when the tax holiday was enacted.

"The decision to do this is not really based on any reasoIt practice was based on a political decision, which I think, by all accounts now, we can look back and say it was a wrong decision," Butler said. "Now we are in a situation where we had to borrow money and that puts everyone in a difficult situation."

In New Jersey, lawmakers used a combined approach to exhaust the trust fund. The Legislature extended the benefits and reduce taxes and spending $ 4,700,000,000 in income of trust funds to reimburse hospitals for indigent health care. The money was diverted for a period of 15 years and helps explain why the state trust fund fell from $ 3.1 million in 2000 to $ 35 million in late 2010. The state has had to borrow $ 1,750,000,000 from the federal government to keep the program afloat.

"It was a real abdication of responsibility and a complete lack of understanding of how to fund an unemployment insurance - to make sure you have enough money in bad economic times," said Philip Kirschner, president of the New Jersey Division Industry Association. "In times of economic boom that collects your bank account, but in New Jersey, said, 'Well, we have all this money, let's go."

California took its own path to the trust fund insolvency. Lawmakers kept the tax rates on the payroll of the same, but gradually doubled the maximum weekly benefit paid to workers laid off at $ 450. The average benefit is now about $ 300 and paid for 20 weeks.

Loree Levy, spokesman for the Department of Workforce Development California, said lawmakers were warned of the consequences.

"We testified in legislative hearings that the fund eventually go bankrupt and become a permanent state of insolvency, if the legislation was not approved to increase revenue," said Levy.

California has provided 9.8 billion U.S. dollars to keep the unemployment insurance payments flowing. Should the federal government interest payments of $ 362 million at the end of September.

In Michigan, unemployment decreased tax rates on insurance from 1994 to 2001. The trust fund prospered over the years due to a healthy economy and low unemployment. Then came the recession and released reserves. In response, lawmakers in Michigan adopted a law which reduced the amount of wages subject to unemployment taxes of $ 9,500 to $ 9,000. Increased the maximum weekly benefit of $ 300 to $ 362. The trust fund was reduced from 1.2 billion U.S. dollars to $ 112 million over the next four years. In September 2006, Michigan became the first state to initiate federal government loans.

Other states held their purpose trust funds off as part of an approach called "pay-as-you-go." Texas is a nationally recognized leader in this effort. His philosophy is that in the long term, it is better for the economy to keep the maximum dollars in the hands of corporations rather than the government. Texas had to borrow $ 1.3 billion in 2009. State officials do not repent of his policy.

"By keeping the minimum at (trust fund), Texas, is able to maximize the funds flowing into the Texas economy, which allows the creation of jobs and stimulating economic growth," said Lisa Givens, spokeswoman the Texas Workforce Commission.

The "pay-as-you-go" approach runs counter to the findings of a presidential commission that examined the issue of declining trust fund in the mid 1990's.

Obama administration wants less gov't in mortgage system

Obama administration wants to reduce government's role in the mortgage system - a proposal to redo decades of federal policy aimed at getting Americans to buy homes and would probably make more expensive mortgages in all areas.

The Treasury Department on Friday released a plan to slowly dissolve Fannie Mae and Freddie Mac, the government-sponsored programs who bought the mortgages to encourage more loans and bailouts necessary during the 2008 financial crisis.

Exactly how much the government's role in mortgages fell to the left in Congress to decide, but the three management options presented create a system of housing finance that depends much more on the private money.

"It is clear that the government wants the private sector to assume a more prominent role in mortgage rates, and that happens, mortgage rates have to rise," said Thomas Lawler, a housing economist in Virginia.

The removal of Fannie and Freddie rewrite 70 years of federal housing policy since the creation of Fannie as part of the New Deal to drive President George W. s Bush for an "ownership society" in the 2000's. It would transform the way homes are bought and redefine who can pay.

Treasury Secretary Timothy Geithner said the plan probably will not happen for at least five years and continue to "carefully." Meanwhile, said the company would have the liquidity needed to meet its obligations.

"We believe there is broad consensus on Capitol Hill and in the private market in general that there must be a transition to a much smaller role for government," he said.

Since the housing market went bust and the country fell into a financial crisis, the pressure has been the ability for the government to stop Fannie and Freddie and reduce risk exposure to taxpayers.

Fannie and Freddie own or guarantee nearly half of all mortgages in the United States. Along with other federal agencies, which have played a role in nearly 90 percent of new mortgages in the past year.

The two agencies buy mortgages from primary lenders, pool, and sold with a guarantee that investors will be paid by default, even if the borrowers. The idea is to give people the opportunity to purchase homes at affordable interest rates.

But the two almost collapsed in 2008 after the market for subprime mortgages collapsed and defaults and foreclosures pile. So far, have cost taxpayers nearly $ 150 million and could cost up to 259 billion U.S. dollars, FHFA says.

Niche Insurance Policies : 6 Bizarrely

Thanks to something called human nature, a small section of society who seek insurance coverage for any given situation, regardless of the risk involved. Fortunately for insurance providers of this world, it also presents more, previously unimaginable opportunities to sell your product. Here are six of the most bizarre insurance policies ever offered.

1- Insurance Cover for the Paranormal 

According to the BBC, was in 2002 that the hotel owner Terry Meggs took out insurance to protect their employers against a rebel poltergeist damage potential. Allegedly paid to a company called ultraviolet £ 500 per year to have your business covered by its' Spooksafe politics: in the case of a staff member or customer who is killed or maimed by a ghost, poltergeist or other abnormal phenomena , agreed to pay up to £ 1M. Luckily for the hotel guests Royal Falcon, until Mr. Meggs did not need to file a claim.

2- Kidnap and ransom insurance

It is depressing to think that in recent decades, as global climate has become more rebellious, the very idea of kidnapping and ransom insurance available to the general public has become much less surprising. In fact, for many companies whose employees are treated in foreign countries on a regular basis, "K & R cover"is now a very normal (and essential) part of the business, especially when you consider the numbers: more than 1,000 kidnappings of professionals and executives are held annually.

3- Multiple Birth Insurance Cover

For many parents are expecting a baby only input causes financial worry. Luckily for them, it is actually possible (through multiple providers of what I imagine) to underwrite an insurance policy that protects against the worrying possibility of the twins come face. Very often the insurance must be removed before the 11th week of pregnancy, after which, in the case of two or more babies born at a time (provided that your payment has been regular, of course) makers insurance can expect a little extra to ease the burden, at least financially.

 

4- Riot Insurance

In an attempt to attract tourists to the area after the ongoing political conflicts that led to the closure of the airports in Bangkok in 2008, the Thai government quickly decided to break the mold and offers free insurance for all disturbances tourists still want to visit country. In fact, the insurance package of $ 10,000 is available in all foreign tourists, along with the promise of a $ 100 per person, someone should experience travel delays as a result of the riots.

5- The Immaculate Conception

For six years, from 2000, the Essex-based British insurance company has been providing a niche form of insurance coverage for three sisters who live in Inverness, Scotland. Unfortunately for all involved, the company was forced to lose the custom of the brethren (a policy of £ 1 million to be paid if one of the sisters of the experience of a virgin birth, so they need funds for see the second coming of Christ) in 2006, after a surprising avalanche of complaints from members of the Catholic Church.

6- Alien Abduction Insurance

For those who live in fear of being dragged on board a spacecraft during the night, only to be examined, marked for life, and subsequently the need for an insurance payout, help is at hand in Alien Abduction Insurance form. The first company to offer such a thing was San Lorenzo Agency, an insurance provider who claim to have sold more than 20,000 of these policies. Less successful in the sand Alien Abduction Insurance was Goodfellow Rebecca Ingram Pearson, a house of values left to offer their insurance kidnapping after it was revealed that the 39 members of the cult Heaven's Gate found dead in 1997 had taken all their insurance before that the mass suicide.

Widow's Tax Lingers For Military Families : PROMISES, PROMISES ...

Tens of thousands of war widows in the nation and quite puzzling lack of respect for their military husbands later: In order to fully reflect on the safety of her husband bought for them in life, you must marry another man.

To qualify, widows should marry when they are 57 or more. Those who remarry soon perish, as widows who never remarried.

At the heart of the problem is a government policy known as the "widows tax." It is said that a military spouse whose loved one dies from a service-connected cause may not receive the survival benefits of both insurance and pension benefits completes the couple bought the Defense Department in retirement. In contrast, the amount of the annuity payment is reduced by the amount of the monthly benefit for survivors.

Again and again, members of Congress have pledged to help the 55,000 widows affected, but the laws passed to help them have only created a more complicated system that left many of them confused and angry.

So what new marriage has to do with it? Very little, as it is. The condition of marriage was nailed to the law by Congress, as they sought to help survivors retain certain benefits if remarried later in life, as is the case with other similar federal revenues. Because Congress has not been able to get the money to help all the widows, the relief is limited to that group. The result is a disaster, but utterly incomprehensible.

"I've never wanted to date, let alone remarry," Hinojosa said Haycock, a mother of three teenagers in Lawton, Oklahoma, whose army of 38 year old husband died in 2002. "I married the love of my life. Why bring that is a factor?"

And there's another wrinkle that leaves even some of those who benefit from the system - women 57 and over who have found love a second time and married again - not at all happy.

For war widows who were denied the benefits of military insurance, the government tried to help by giving back the premiums of their spouses had paid for the policy. But if a widow, then remarried at age 57 or older, be entitled to the benefit which can only be achieved by the return of insurance premiums that the government had returned to her.

Schroeppel Freda Green, 74, whose late husband served in Vietnam and died of a service-connected disability after 30 years in the Air Force, said he was surprised after remarrying last year to receive a bill government to pay more than $ 41,000 in insurance premiums. Those premiums had been returned to her after his death 2003 because at that moment she could not receive the full benefit of the annuity.

"It makes no sense to me," said Green, of Brooksville, Florida "Why send the premiums you paid and now want him back?"

Does not make sense Sen. Bill Nelson, D-Fla., And 10 other senators last week that legislation to help widows.

"This has always been a subject of the military to do the right thing and live up to their promises," Nelson said in a statement. "These policies were purchased by men and women to ensure that their loved ones to be cared for after his death. There is only a promise that the government has failed, but now is sending bills to the survivors. That is outrageous ".

Among the widows, the Greens and the approximately 700 who remarried after age 57 are considered the lucky ones because at least they no longer have a benefit subtracted from the other.

Other surviving spouses - most of which lost about $ 1,000 a month due to the current configuration - have struggled for years on Capitol Hill.

Gold Star Women of America, Inc., a group of military widows chartered Congress supports legislation backed by Senators and Rep. Joe Wilson, RS.C., that would eliminate the offset and does not require widows to pay premiums in advance refunded. They argue the survivors have spent years living without the benefit of the annuity and is cheaper for the government to give bonuses to manually calculate what I had.

The main obstacle to eliminate the benefit of travel is in cash. That would cost the government about $ 6.7 billion over a decade for widows to reap the benefits in full.

The Defense Department has long said there was never an expectation that both programs are provided at the same time. Clifford Stanley, the undersecretary of defense for personnel, told Congress last year that the elimination of compensation could create inequalities in their benefits programs.

Widows do not agree. Most surviving spouses affected "paid an average of 6.5 percent of their retirement pay - or about $ 100 a month or more - to the annuity. The service members died thinking that your spouse benefit from it, widows say, as if they had bought a life insurance policy private. The idea that insurance benefits would be reduced if the husband died for a reason connected with the service and the widow was receiving survivor benefits are never explained, say .

"No one could see the train wrecking," said Viviana Wersel, president of government relations for Gold Star Wives, whose husband died in 2005, days after returning from a tour of the invasion of Iraq. "They had no idea. It was not until death do they realized they were not getting what her husband thought we were going to receive."

For the past few years, a measure to eliminate the shift has happened in the Senate is only interrupted when negotiators from the House and Senate met in private to discuss in depth in defense spending.

Instead, Congress in recent years has given the small surviving spouses legislative victories that in retrospect, seem only to have created new inequalities, said Steve Strobridge, a former Air Force colonel who is director of government relations Military Officers Association of America.

One of those victories was the rule of 57 and higher remarriage, that initially the Department of Defense does not recognize. Three of the widows later successfully sued, and in 2009 the Defense Department issued new guidelines saying the 57-year surviving spouses who remarry would not be subject to compensation.

At the time of the court decision in favor of widows, including the federal appeals court sided with the asked what Congress was thinking only help a small subset of widows. Noting that the service member to pay a benefit with premiums and the other with his life, Judge George W. Miller wrote: "Maybe it was the recognition that the political process is the art of the possible, and that prudence dictates against making the perfect the enemy of the good."

Another small victory in Congress gave the widows affected by the shift liability of $ 50 per month from 2010. Instead of bringing happiness to the widows, however, many felt that Congress was acknowledging that he had been treated unfairly, but it was not motivated by money to solve the problem correctly.

"What am I supposed to do with it except put it in my gas tank and reduce your office to complain?" Said Suzanne Gerstner, 43, of Brandon, Fla., mother of three whose husband died in 2005 of cancer linked to his 20 year Air Force service. "Every little bit helps. Do not get me wrong, but that is a kind of insult."

Wilson, who chairs a House subcommittee with control over military personnel matters, said that for many of the survivors, which eliminates the offset is the difference between scraping and having a lifestyle of middle class. Members of the House Republican Party have pledged to cut public spending, but Wilson said that even in difficult times, the care of survivors is important. He supports a gradual process to remove the current configuration.

"It is certainly a priority basis," he said. "Let's show our thanks for surviving spouses and children ... or spend the money some other way?"