To that, the Federal government is going to now add the insolvent state governments. According to the NY Times:
|Looks like a corpse, doesn’t it?|
President Obama is proposing to ride to the rescue of states that have borrowed billions of dollars from the federal government to continue paying unemployment benefits during the economic downturn. His plan would give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans.
The proposal, which administration officials said would be included in the 2012 budget that the president is scheduled to unveil next week, was greeted coolly by Republicans on Capitol Hill, who warned that the plan would ultimately force many states to raise their unemployment taxes in the years to come.Screw the “unemployment taxes in the years to come”—the Federal government will be adding massive liabilities to its balance sheet now, which will force even more issuance of debt in order to keep the Federal government afloat.
And since the Federal government is insolvent, this added debt will force the Federal Reserve to continue buying up Treasuries.
Obvious question: Is there anyone in a position of power in the United States who gives a shit about the fact that the government is being driven bankrupt?