Obama to propose relief for states burdened by debt from unemployment benefits
By Lori Montgomery and Brady Dennis, Washington Post, February 9, 2011
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States that have borrowed billions of dollars from the federal government to cover the soaring cost of unemployment benefits would get immediate relief from the Obama administration under a plan to suspend interest payments for the next two years.

The proposal, which will be included in the budget request that President Obama will send to Congress next week, would allow states to avoid raising taxes on employers to cover the payments - which are projected to total of $3.6 billion through 2012, according to independent estimates.

Obama also would suspend automatic hikes in the federal unemployment tax scheduled to hit employers in nearly half of the states by the end of next year.

But starting in 2014, Obama would target companies for sharply higher payroll taxes to help states replenish their unemployment funds and repay their debts to Washington....

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/08/AR201102...

Obama Plans to Rescue States With Debt Burdens
By MICHAEL COOPER and SHERYL GAY STOLBERG, New York Times, February 8, 2011

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.

But the White House is calculating that the proposal will ultimately appeal to Republicans because it involves a tax moratorium right now for hard-hit states during a still-fragile economic recovery....

http://www.nytimes.com/2011/02/09/us/politics/09states.html