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The Obama administration is proposing short-term relief to states saddled with unemployment insurance debt, coupled with a delayed increase in the income level used to tax employers for the aid to the jobless.

The administration plans to include the proposal in its budget plan next week. The plan was confirmed late Monday by a person familiar with the discussions on the condition of anonymity because the budget plan is still being completed.

Rising unemployment has placed such a burden on states that 30 of them owe the federal government $42 billion in money borrowed to meet their unemployment insurance obligations. Three states already have had to raise taxes to begin paying back the money they owe. More than 20 other states likely would have to raise taxes to cover their unemployment insurance debts. Under federal law, such tax increases are automatic once the money owed reaches a certain level.

Under the proposal, the administration would impose a moratorium in 2011 and 2012 on state tax increases and on state interest payments on the debt.

In 2014, however, the administration proposes to increase the taxable income level for unemployment insurance from $7,000 to $15,000. Under the proposal, the federal unemployment insurance rate would be adjusted so that the new higher income level would not result in a federal tax increase, the person familiar with the plan said.

States, however, could retain their current rates, meaning employers could face higher unemployment insurance taxes beginning in 2014.

Though the administration could face criticism for enabling states to increase taxes, the thrust of the administration's argument is that federal taxes would not increase and that the move is fiscally prudent because the federal government ultimately would be repaid at a faster rate than if it did nothing.

The person who described the plan said only 13 of the 30 states that owe the $42 billion would be expected to repay their share of the money in the next nine years under current conditions. The administration's proposal would allow 15 more states to repay the money, this person said.

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Yet another loan.  Where is the "loan" money supposed to be coming from in the first place?  Oh yeah - just crank up the preses at GPO.  

How about the novel idea of making US products more competitive overseas, so we can SELL more overseas, create a positive balance of trade and actually make a profit.  We need to become a creditor nation once again.  Otherwise we will continue to slip into the economic abyss.

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I guess I feel very lucky in my life to only have used the "unemployment" system once....for just over a year.  Honestly....why do we keep reading this sort of stuff?!  Could it be that NOBODY in Obama's administration understands the word NO!  I always thought that the first word that we taught kids...and they said back to us was NO....how is it then...that our "baby".....the economy does NOT understand this word!!

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Until the govt gives business a good reason to do business here and hire workers here ....nothing is going to change.  They gotta deregulate, gotta slash the corporate tax...and maybe find a good plan to deal with organized labor.

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i can't really fault the states on this. i mean the federal government has extended unemployment benefits by almost 4 times what it once was, constituting a huge mandate on the states, most of which are already broke. i am confused though. peloski said that unemployment benefits were the best thing you can do to boost the economy, so you figure the states would be rolling in dough.

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I dunno how she figures that.  Unemployment is running roughly 14% here.  the money given to us is almost immediately being handed out in benefits to help the unemployed.  And since oil is high, prices are high, plastics are up, shipping costs are way up, food prices are way up.  We've monetized the debt, devalued the dollar, so the money they dole out in unemployment is much much weaker.