another kick in the pants for the macro-economy: higher state payroll taxes to finance federal-mandated unemployment subsidies

From Sara Murray in the WSJ...

State governments are borrowing heavily from the federal government to keep paying unemployment-insurance benefits and, even with the weak job market, most states are raising payroll taxes to pay off the loans.

Thirty one states, their unemployment-insurance funds empty, have borrowed nearly $41 billion from the federal government....

As states try to replenish the funds and begin to repay the loans, employers are facing increases in both state and federal payroll taxes, a potential barrier to new hiring....

Payroll taxes levied by states fund unemployment benefits for up to 26 weeks—and longer in some states. The federal government requires states to pay benefits even if their unemployment funds run out of cash...

Federal loans to states have so far been interest-free under a provision in the Obama administration's 2009 fiscal-stimulus law. But that waiver expires in January...