Usually, we get a small sense of comfort out of having company in financial irresponsibility. Like, for instance, if we purchase a giant handbag instead of dutifully putting the money into a savings account — or, let’s face it, creating a savings account — and a friend of ours tells us they did the same thing, we think, “Cool, at least I’m not the only one, so it must be okay. Also, I may get hit by a bus tomorrow, so suck it, Suze Orman.” But the news that the New York unemployment system is running on credit is the opposite of comforting.
On Jan. 2, the first business day of the new year, more money went out to the unemployed than came in from employers, forcing the state to borrow $39 million from the federal fund, state officials said. Since then, it has borrowed more than $80 million a week.
“I think we went insolvent about two hours into 2009,” said M. Patricia Smith, the state’s labor commissioner. “We’re seeing 50 percent more claimants each week than a year ago.”
What’s worse is that it could have been prevented. The unemployment fund has long been underfunded, and also had a fling with insolvency in 2001. But disputes over how to fix it in Albany prevented anyone from actually doing anything about it, and now loans could wind up costing the state unemployment fund more than $100 million in interest and result in taxes on all employers across the state.
Of all the cracks in the façade of our lifestyles that the financial crisis has exposed, this feels like one of the worst. Hasn’t anybody been responsible about money?
New York Borrows to Pay Jobless Claims [NYT]