When the COVID-era spending binge finally wound down, most states did what responsible governments do — they squared up. The federal government had extended emergency loans to cover a historic surge in unemployment claims, and one by one, every state settled its balance. Every state except one. While small business owners and farmers clawed their way back from lockdown devastation, one blue-state capital decided the rules were for everybody else.
You’ve seen this movie before. Progressive politicians treat federal dollars like house money — redirect it toward ideological vanity projects, ignore the actual obligations, and hope nobody notices the tab. Somebody always notices. And somebody always pays. It’s just never the politicians. Now, it appears at least one lawmaker is done watching from the sidelines.
From Fox News:
A House Republican is moving to rein in California’s ballooning unemployment insurance debt, arguing employers are being stuck with the bill as the state fails to repay what it owes.
Rep. Vince Fong, R-Calif., will introduce legislation on Tuesday that would require California to pay its outstanding $21 billion loan to the federal government before spending federal money on other programs.
Twenty-one billion dollars. Not million — billion. And it’s getting worse. That figure is projected to top $23 billion by the end of this year. California stands alone as the only state in America that hasn’t repaid its COVID-era unemployment loans. Red states paid up. Blue states paid up. California? Couldn’t be bothered.
They had the money — and torched it
Here’s the part that should have every American taxpayer seeing red. In 2022, California was sitting on a budget surplus of nearly $98 billion. That’s not a typo. Ninety-eight billion. Enough to wipe the unemployment debt almost five times over. Problem solved, right?
Not in Sacramento. Governor Gavin Newsom and his Democratic legislature plowed that surplus into homelessness programs that haven’t reduced homelessness, infrastructure wish lists, and — brace yourself — subsidized health insurance for illegal immigrants. They had the money. They made a deliberate choice to spend it elsewhere. And when Fox News asked Newsom’s office for comment on this whole debacle? Silence. Not even a boilerplate denial. Just crickets.
That tells you everything you need to know.
The people who actually build things are getting crushed
While Sacramento plays budget Jenga, California’s employers are absorbing the damage. Because the state refuses to honor its federal obligations, automatic payroll tax hikes have kicked in. Every business in California is now paying an extra $42 per employee on federal payroll taxes — not because they did anything wrong, but because their state government can’t manage a checkbook.
Forty-two dollars per head adds up fast when you’re running a restaurant, a farm, or a machine shop. Fong nailed it in his statement: “My legislation restores accountability, protects our local small businesses and farmers, and prevents California job creators from being punished for Sacramento’s negligence.” That’s not partisan rhetoric. That’s basic fairness. The people generating jobs and tax revenue shouldn’t be penalized for a governor’s spending addiction.
Fraud isn’t a bug — it’s the operating system
The unemployment debt would be scandalous enough on its own. But it sits atop a mountain of fraud so brazen it almost sounds fictional. During the pandemic, thousands of California inmates — including people on death row — filed for and received unemployment benefits. Death row. The scheme cost taxpayers up to $1 billion. Let that marinate for a moment: people the state was literally housing and feeding collected unemployment checks, and nobody in Sacramento caught it.
The California State Auditor flagged the unemployment system as “high risk,” citing “inadequate fraud prevention” and “significant missteps” that likely enabled billions in fraudulent payments. The Department of Labor deployed a strike team in February to investigate. And just last week, the Trump administration withheld $1.3 billion in federal Medicaid funding over separate fraud concerns among California’s hospice providers.
Vice President Vance put it plainly: “The simple reason is because the state of California has not taken fraud very seriously.”
No more free passes
Fong’s bill deserves full-throated Republican support. It would force California to direct eligible federal funds toward debt repayment within five business days — no more siphoning money into progressive slush funds while the balance balloons. Simple. Direct. Overdue.
But this can’t be where the effort stalls. Republican voters sent their representatives to Washington for precisely this kind of fight — to hold reckless governments accountable and protect the taxpayers who keep this country solvent. Every other state found a way to settle its debt. California chose not to. The GOP majority must make sure that the choice carries consequences.
Forty-nine states managed to do the right thing. Sacramento’s free ride needs to end.
Key Takeaways
- California is the sole state that hasn’t repaid its COVID-era unemployment loans — now exceeding $21 billion.
- Sacramento squandered a $98 billion surplus on progressive priorities instead of honoring its debt.
- Automatic payroll tax hikes are punishing California employers for the government’s failures.
- The GOP must back Fong’s bill and force real accountability on Sacramento.
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