Relief for states proposed

last updated 8 January 2015

President Obama has proposed a respite for states that borrowed from the federal government to pay their citizens’ unemployment benefits. Under the 2009 stimulus act, states that took loans from Washington to pay jobless claims paid no interest for nearly two years. That grace period expired on Dec. 31, leaving 30 states together owing $42 billion. Some businesses face mandatory increases in federal payroll taxes to help repay the loans.

In his 2012 budget, Obama will propose waiving the tax hikes and interest payments for two more years. House Republicans say they’ll oppose any payroll-tax increase, even if it’s deferred until 2014.