Taxpayers to help with the rent at Goldman’s new office tower

As if billions in cash and government guarantees wasn't enough, it turns out investment bank Goldman Sachs will also be sucking on the taxpayers' teat when employees move into their slick new digs at the corner of West and Vesey in Manhattan next year.

The New Goldman Sachs World Headquarters -- a 43-story office tower next to the World Trade Center site -- is being built with the help of millions of dollars from taxpayers, Bloomberg news service reports.

The company that has been the focus of populist anger since the TARP bailout last year took advantage of programs the government set up to revitalize lower Manhattan after the 9/11 attacks. Setting up shop next to the WTC qualified Goldman Sachs for $49 million in "job-grant funds, tax exemptions and energy discounts," Bloomberg's Christine Harper reported.

Additionally, because then-Goldman Sachs CEO Hank Paulson raised concerns about security at the site, the city and state gave the construction project an additional $66 million in benefits. And the investment bank was also allowed to sell tax-free some $1.6 billion of Liberty Bonds -- bonds created to fund the effort to rebuild lower Manhattan. That allowed Goldman Sachs to avoid taking out a commercial loan for that amount of money, saving it an additional $175 million over 30 years, according to the Bloomberg report.

The New York Daily News reported earlier this month that the city of New York forgave Goldman Sachs about $161 million in lease payments the company would have had to make on the land where the new 43-story office tower sits. Under the agreement between the city and the company, Goldman doesn't have to pay the lease if Ground Zero remains empty.

Bloomberg reports that Goldman Sachs in on track to make $11.4 billion in profit this year, nearly tying its all-time record of $11.6 billion in 2007. In last year's bailout, the company received $10 billion in cash, had $30 billion of loans guaranteed by the government, and was re-classified as a bank holding company, which allows it to borrow cheaply from the Federal Reserve.

The new Goldman Sachs tower has been a headache -- and a hazard -- for New Yorkers. In December 2007, an architect was paralyzed when seven tons of steel fell off the building. Late last month, glass falling off the building shattered in the streets below and snarled traffic for hours.

More prime mortgages default in 3rd quarter

Also: Many homeowners with modified mortgages fall behind again. And the number of homes in foreclosure rises, though new foreclosures are steady, report shows.

Reporting from Washington - Troubled home loans continued to mount in the nation's banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments.

For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier. And more than half of all homeowners whose payments had been lowered through modification plans defaulted again.

The report, which covers about 34 million loans, or about 65% of all U.S. mortgages, underscores the obstacles to strengthening the nation's rickety housing market. Stubborn unemployment is making it tough for millions of homeowners to pay their debts. In addition, many people whose monthly installments have been lowered still are unable to keep up with their payments.

Of the mortgages serviced by national banks and thrifts, only 87.2% were current and performing. It was the sixth straight quarter that the quality of those home loan portfolios had slipped.

"Mortgage performance continued to decline as a result of continuing adverse economic conditions including rising unemployment and loss in home values," the report said.

Seriously delinquent mortgages -- loans 60 or more days past due and loans to delinquent borrowers who have filed for bankruptcy -- rose to 6.2% of the servicing portfolio. That's a 16.7% increase over the second quarter and a 73.8% increase from a year earlier, the report said.

Of those seriously delinquent loans, the number of homes in the foreclosure process reached 1.09 million, about 3.2% of all the loans surveyed.

The report highlighted some troubling trends as the housing market continues to struggle despite increasing sales and prices in many areas. Difficulties increased for holders of prime mortgages, with the percentage of those loans that were 60 days or more past due increasing to 3.2%, up almost 20% from the second quarter and more than double the rate of a year earlier.

In addition, holders of mortgages whose payments had been lowered through government or private modification plans re-defaulted at high rates. More than half of all homeowners with modified loans fell 60 days or more behind in their payments within six months of the modification taking place.

But Bruce Krueger, a mortgage analyst for the Office of the Comptroller of the Currency, noted that homeowners with more-recent modifications were doing better at keeping up with their new payments, reflecting a push by the Obama administration to get mortgage servicers to come up with better plans.

About 35% of homeowners who received modifications in the third quarter of 2008 fell 60 days or more behind on their payments within three months of the modification, the report said. That figure decreased to about 19% of homeowners who received a modification in the second quarter of this year.

Still, the report's data could add pressure on Congress to give financially strapped homeowners additional help by allowing judges to lower mortgage principle as part of bankruptcy, said Jaret Seiberg, a financial policy analyst with Concept Capital's Washington Research Group.

"While the re-default rate seems to be getting better, it's still very high and it's high enough to continue causing a political problem for the industry," he said.

Mortgage modifications increased in the third quarter as the Obama administration pushed servicers to participate in its Making Home Affordable modification program. The report said servicers modified 680,000 loans through that program or their own efforts. Overall, mortgage servicers started almost twice as many modifications as new foreclosures.

Oddly, the increased attempt to keep people in their homes with lower payments contributed to the rise in the number of homes in the foreclosure process. The pace of homes beginning foreclosure proceedings remained about the same in the third quarter as it was earlier this year. But fewer of those proceedings were finished, as mortgage servicers worked with homeowners to modify some of those loans.

Monday's report comes on the heels of a private report last week that said there were 1.7 million homes headed for the market because of foreclosures or delinquency. That backlog of "shadow inventory" increased 55% in the year that ended Sept. 30, said the report by First American CoreLogic, a Santa Ana research firm.

The Obama administration has been trying to reduce foreclosures through its mortgage modification program, but reported this month that few of the three-month trial modifications were being made permanent. Of the more than 700,000 trial modifications offered by mortgage servicers, just 31,382 had been made permanent as of Nov. 30. Administration officials have increased pressure on mortgage servicers to improve that figure.

US third-quarter growth revised down to 2.2 percent

The US economy limped forward at a 2.2 percent pace in the third quarter, according to government figures Tuesday that showed a downward revision of gross domestic product (GDP).

The downward revision from last month's estimate of 2.8 percent growth came primarily from a weaker contribution from business investment, as well as slightly slower consumer spending growth.

The report nonetheless confirms that the world's biggest economy swung back to growth in the July-September period after four quarters of contraction in the worst recession in decades.

The Commerce Department revision indicates the economy's momentum in the third quarter was weaker than anticipated, suggesting that the recovery from recession may be tepid.

"The recovery is underway, but this does raise concerns about its strength and the prospects for a turnaround in the labor market," said Augustine Faucher at Moody's Economy.com.

"The next few quarters will be rough. The economy will expand, but weakly. The boost from fiscal stimulus is fading, the hangover from cash from clunkers will weigh on vehicle sales, and consumers and businesses remain wary."

The report showed manufacturing helping lift the economy, especially in the auto sector where the "cash for clunkers" incentives program boosted sales into August.

Motor vehicle output accounted for 1.45 percentage points of GDP in the quarter.

Scott Brown, chief economist at Raymond James & Associates, said the report was "a bit disappointing" and suggests "that underlying domestic demand is pretty soft."

Brown said he expects a jump in growth to at least 4.0 percent in the current fourth quarter, but says much of that will come from restocking of business inventories drawn down in the recession.

Looking at 2010, Brown said the economy may grow at around 3.0 percent "which is good by historical standard but not enough to bring the unemployment rate down substantially."

"It's going to take a long time before we're firing on all cylinders," he added.

The third quarter GDP report showed business investment grew at a 5.0 percent pace, revised down from an earlier estimate of 8.4 percent. Consumer spending, which accounts for the lion's share of economic activity was revised to show growth of 2.8 percent instead of 2.9 percent.

Federal government expenditures were up 8.0 percent in the quarter but state and local government spending fell 0.6 percent.

The GDP report was the final revision after two earlier estimates, the first of which showed a surprising 3.5 percent pace of growth. This was cut twice based on more complete data for the end of the quarter.

Robert Brusca at FAO Economics said the report confirms the economy is on the mend: "this setback is merely postponing the growth impact for another day."

Although some sectors were revised lower, Brusca said "still it is a positive rate of growth and represents a nearly 3.0 point acceleration from the second quarter rate of growth. And, most importantly, the recovery game is on."

Although many economists say the US recession is over, an official declaration has yet to come from the private National Bureau of Economic Research, seen as the official arbiter of business cycles.

The NBER panel does not use the definition employed in many countries of recession as two consecutive quarters of declining GDP. It says a recession is "a significant decline in economic activity spread across the economy," with drops in output, income, employment and sales.

A separate report showed sales of US existing homes surged 7.4 percent in November to the highest level since February 2007, as buyers rushed to take advantage of tax credits.

The National Association of Realtors said sales rose to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October.

The gains in home sales suggest a recovery in the sector at the epicenter of the global financial crisis, where a housing boom followed by a meltdown led to trillions of dollars in losses and led to a worldwide recession.

Symbolic Economies: U.S. and China

The symbiotic partners of "Chimerica" both present symbolic economies which mask the structural rot in their real economies.

I am indebted to Australian analyst John Craig of the Centre for Policy and Development Systems for the concept of a symbolic economy which is presented as "evidence" of "healthy growth." Behind the symbolic facade, the real economy is devolving toward structural implosion.

Such a substitution by the Power Elites/State partnership of symbolic prosperity for broad-based, real prosperity is what I term a simulacrum of prosperity in the Survival+ analysis.

For China, the symbolic economy is a highly suspect GDP growth rate of 8%, mostly fueled by stupendous Central Government stimulus and unprecedented borrowing. Correspondent B.C. submitted this article China May Have 8 Trillion Yuan in New Loans in 2010 (Bloomberg) and this commentary:

Lenders, under government pressure to finance part of the nation’s 4 trillion yuan stimulus plan, advanced a record 9.21 trillion yuan of new loans in the first 11 months, more than double the amount offered in the same period last year.

~30% of GDP for two successive years and 150% growth in two years?

This would be equivalent to the US expanding bank lending by $11T from '08 to '09-'10.

Assuming the bank loans/GDP ratio, US GDP would have been reported to have grown $21 trillion in two years.

The growth of China's lending is at a compounding doubling rate of 18 months. That's right, in 18 months.

This puts China's money velocity below 1.0 and the multiplier at ~0.9.

Virtually nowhere does one read in the financial press the full extent of the absolutely mind-blowingly extraordinary runaway credit expansion occurring in China. There is simply no precedent in modern economic history for a country to have expanded lending at such a rate and share of GDP in such a short period of time.

That all other more "modest" episodes throughout history resulted in the greatest bubbles and subsequent crashes in world history, we are potentially witnessing (without most of us knowing it, apparently) the prelude to a China crash that will become a financial and economic black hole into which the entire global economy is consumed.

There is absolutely NO WAY that bank lending doubling in 18 months can be prudently and efficiently intermediated.

This kind of growth of lending, production, and hoarding of commodities is akin to a full-out war mobilization effort; a kind of last surge of production and laying up of stores before the armor is put on; the women and children are safely put out of harm's way; the blades and arrow tips are carefully sharpened and honed; the breast is thoroughly beaten and war cries sufficient to summon the gods of war; the necessary sacrifices are made to the gods; and the gates of the fortress are flung open, and the well-fed dogs of war are unleashed upon the enemy.

Thank you, B.C. As noted elsewhere in the blogosphere, much of this gigantic flood of borrowed money has flowed into

1. questionable infrastructure projects

2. a massive expansion of capacity in industries which already have too much capacity

3. empty malls, towns, luxury condos and other buildings, reinflating China's real estate bubble.

In the U.S., unprecedented Federal borrowing and bailouts have created a symbolic economy of the stock market rally and bogus "recovery" statistics.

Even as measurements of the real economy show structural devolution (tax receipts continue to plummet, incomes and hours worked remain at Depression levels, jobs are still being lost, etc.), the stock market's 70% rise is in effect the symbolic evidence that the "economy is recovering." Behind this symbolic facade, the real economy lies in ruins.

How can GDP be growing at a robust 3.5% clip (oops, already adjusted down to 2.7% a few weeks ago and now it's been adjusted down again to 2.2%) while employment and tax receipts are both falling? The answer: statistics are ginned up to support the symbolic economy of recovery, rising corporate earnings and a "new Bull Market" in stocks.

As a reader noted here earlier in the year, the stock market is the sole accomplishment of this administration and Congress. Without the "feel good" "New Bull Market," then the emptiness of the real U.S. economy would be in full view.

The Powers That Be might be questioned at that point, so a facade of "recovery" and a rising stock market are presented as a symbolic U.S. economy.

Take the Chimerica facades for reality at your peril.

Sweden to Donate $1.2B to Help Developing Nations Fight Climate Change

STOCKHOLM — Sweden says it will give $1.2 billion to help developing nations fight climate change.

Government spokeswoman Roberta Alenius says Prime Minister Fredrik Reinfeldt will announce Sweden's donation to a European Union program for a so-called "fast-start" financing fund on Thursday.

The total EU donation is expected to be proposed at the meeting in Brussels.

Sweden currently holds the rotating EU presidency and is heading talks with other members of the bloc about potential contributions.

Alenius said Wednesday that not all the 27 countries would be able to assist because some are experiencing serious financial problems.

9/11 Drug Pilot & Operation Blue Lightning

Elements of the U.S. Government took a surprisingly keen interest in controversial Guyanese drug pilot Michael Brassington during 2003 and 2004, when, according to interviews with former Customs Agents, Brassington was involved in—or the subject of—a secretive Miami-based U.S. Government operation.

“Whenever Brassington entered the U.S. a special team from Miami was supposed to come up,” stated former Fort Lauderdale Customs Agent James Sanders.

Brassington was supposed to be met by Customs Agents from “Operation Blue Lightning.”

“Operation Blue Lightning is some kind of joint task force," Sanders explained. "I found out later, from a chief inspector on the team, that I wasn’t even supposed to inspect him.”

Official interest in Brassington’s activities in 2003 and 2oo4 is surprising... and suspicious, because before he was indicted in 2008—barely two weeks after the Bush Administration left office—he regularly flaunted U.S. and international law with “seeming impunity.”

A CIA 'rogue operation' in US Customs?

So while the intent of Operation Blue Lightning’s interest in Brassington remains unclear, it is fair to ask: Was Brassington’s “special handling” by Operation Blue Lightning designed to impede criminal activity? Or to facilitate it?

Operation Blue Lightning clearly fits the description provided by a top DEA official in Miami when he informed us why the DEA had not mounted an investigation into the owners of two planes caught carrying over 10 tons of cocaine in Mexico’s Yucatan:

Because the two American drug planes belonged to a “rogue” operation in U.S. Customs, explained the DEA official. So the investigation properly belonged to the Office of Investigations in the Dept of Homeland Security.

But the existence of any federal investigation in the scandal is merely a matter of speculation, we soon learned.

An official in the Dept. of Homeland Security’s Inspector General’s office said the Department’s practice is to neither confirm nor deny the existence of any internal investigation conducted by the Inspector General’s office.

Later, we learned that the lead FAA investigator on the case was called off and reassigned, under typically suspicious circumstances.

To this day Brassington has never been charged with drug trafficking.

As rookie Customs Agent James Sanders learned the hard way, Brassington was protected by top figures in the Dept of Homeland Security.

When they want to protect or cover something up, the government has a neat trick they sometimes use:

They “investigate” it.

"The red light saved my life."

Brassington goes on trial next month in Federal Court in Newark, for putting the lives of passengers in danger in a near-fatal crash of a luxury jet at Teterboro Airport in New Jersey in February 2005.

The crash was so spectacular that it led all three evening newscasts. A Challenger luxury jet, which had come in from Vegas late the night before, hurtled off the runway and across a six-lane highway busy with morning rush hour traffic. More than 20 people were injured.

Authorities expressed amazement that nobody was killed.

The crash sparked a federal criminal investigation which turned up evidence of a pattern of illegal activity so egregious that former Inspector General Mary Schiavo of the U.S. Department of Transportation called Brassington’s charter company “Loophole Airlines.”

The responsible Federal agency, the FAA, even came under rare criticism from another Federal agency, the NTSB. According to the NTSB, neither the pilot nor the co-pilot were rated to fly the flight they were flying.

The flight attendant had no safety training. She was a dancer at the Voodoo Lounge in Miami. When the plane caught fire she didn't know how to open the doors.

Dozens of drivers and passengers in cars driving along the highway next to Teterboro Airport are alive today—not because of action to safeguard passengers by the FAA or the NTSB—but because of the vagaries of traffic signals.

They were saved from death because they happened to be stopped at a red light.

"Animal House...with badges and guns"

Even for Miami, Operation Blue Lightning has a highly-checkered past and a particularly sordid pedigree, which was exposed in a series of investigative articles in the Miami Herald during the late 80’s.

Ahern’s stint as head honcho was called a “Reign of Terror” in the Miami Herald.

The paper called the Miami Customs District, then led by Jayson Ahern, “Animal House with Badges and Guns.”

And even though he'd been in the thick of it personally, amid widespread allegations of internal corruption, sexual antics, and serious security breakdowns which dogged him for years, Jayson Ahern rose to become (Acting) Customs and Border Protection Commissioner.

He was a real Teflon Don.

“They were out of control and everyone knew they were out of control, no question about it,'' the paper quoted a Customs investigator. “That group had a lot of power, and Customs did everything it could to make the case go away - merits of the complaint be damned,'' the investigator said.

“The truth of the matter was not the concern, everyone in Customs knew the truth. The concern was for saving face.”

Somebody really loved Jay Ahern. Proving the point: although by all accounts the cocaine trade boomed during the 1980’s, Ahern was among an elite group of Miami inspectors lauded in news reports for achieving "success" in the war on cocaine smugglers.

Great press. No convictions. Some people have all the luck.

And like a bad penny resurfacing again and again, after 9/11 Ahern’s Contraband Enforcement Team was brought back and rechristened "Operation Blue Lightning."

And Jayson Ahern was the man behind the firing of rookie Customs Agent Sanders, after the "complaint" by solid citizen(!) Michael Brassington.

Nixon would be proud.

A DEA look-out... and friends in high places

In an exclusive interview in the upcoming “New American DrugLords” documentary, James Sanders, a former Customs Agent in Fort Lauderdale, FL, told how he had been on duty, and in charge, late on a Tuesday night at the International Airport in Fort Lauderdale, when Brassington flew in.

While Customs Agent Sanders was still examining his narcotics record in the computer, Brassington began brandishing a letter from a top official in the U.S. Dept of Homeland Security which seemed clearly designed to smooth his re-entry into the U.S.

“I was looking at Brassington’s narcotics record on the computer,” says Sanders, still incredulous at the memory, “when he handed me a letter from Washington!”

Confused, Sanders phoned Supervisor Norm Bright at Immigrations & Customs Enforcement (ICE), whose name appeared in Brassington’s file, and was told that he was to treat Brassington as a “grave threat to national security.”

Brassington was flying in on a plane (N60S) suspected of being used for money laundering. 

His passenger,  Anthony Cirillo, was flagged in the computer for having been on suspicious flights.

Pilot Brassington himself had a “DEA look-out,” Sanders told us.

Mohamed Atta. Remember him?

This was a consequence of Brassington’s having

flown as co-pilot on a Lear jet (N351WB) 

that was busted by DEA agents at Orlando 

Executive Airport in July of 2000 carrying 

43 lbs. of heroin. 

The Learjet belonged to Wallace J. Hilliard, 

owner of the Venice Florida flight school

where Mohamed Atta was then learning to fly. 

Before being busted, the Learjet had flown, with Brassington as co-pilot, on 39 weekly drug flights between Florida and Venezuela.

Yet, despite these incriminating facts, two career Customs officials with checkered histories in Miami, Thomas Winkowski and just-retired Acting U.S. Customs Commissioner Jayson Ahern, intervened on Brassington’s behalf after he wrote a letter of complaint to Ahern, then the third highest ranking official in U.S. Customs.

Rookie Customs Agent James Sander’s encounter with Guyanese drug pilot Michael Brassington ended up costing him his job.

There at the inception

The first newspaper mention of Operation Blue Lightning was back in the spring of 1985, when United Press International called it "an unprecedented assault that rousted drug smugglers from island sanctuaries in the Bahamas into a massive military trap that netted $100 million in drugs, boats and planes."

And a familiar figure from the government was on hand at the inception of Operation Blue Lightning...

''I wish I could be with you to announce the spectacular results of Operation Blue Lightning,'' said Vice President George Bush at the news conference announcing the haul.

Bush said the seizure of cocaine and marijuana ''that won't reach our city streets to corrupt the minds of our citizens and line the pockets of drug smugglers is a significant achievement.''

Alas, statements by Presidents named Bush concerning drug trafficking cannot be taken at face value very often... Almost two decades later Bush's son George W Bush will announce the U.S. plans to get the world’s leading heroin trafficker dead or alive.

His name was Osama bin Laden. Anybody remember him?

Unemployment funds going ‘absolutely broke’

40 state programs to be emptied by the jobless tsunami within two years

The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

"There's immense pressure, and it's got to be faced," said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana's unemployment program. "Our system was absolutely broke."

Give-and-take
The Indiana legislation protected the aid checks, Niezgodski said, but it came after a give-and-take this spring in which Gov. Mitchell E. Daniels Jr. (R) said the state had been providing "Rolls-Royce benefits" and several thousand union workers countered by protesting proposed cuts at the state capitol. In January, the legislature is slated to consider a bill to delay the proposed tax increases intended to refill the fund.

In Nevada, Gov. Jim Gibbons (R) and legislators have feuded over the unemployment program, which is $85 million in debt to the federal government, with Gibbons accusing the legislature of "callous disregard" for not setting a tax rate.

And last week, a state task force in Kentucky recommended cutting benefits about 9 percent and imposing a week's delay in their payment. The average benefit check there is about $309 a week. The task force also proposed raising taxes.

"There were some moments of high anxiety" during the negotiations between industry and labor groups, said Joseph U. Meyer, the state's acting secretary of education and workforce development. "But in the end, the realistic options became fairly apparent."

Two choices
State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered -- either cut the benefit or raise the payroll tax.

Industry and business groups often lobby against raising the payroll tax on employers, while unions and other worker groups protest benefit cuts.

"We want to make sure Kentucky remains competitive and also maintain an environment of fairness," Meyer said of the negotiations.

Nationally, the average tax is about 0.6 percent of payroll; the average weekly check is about $300.

Not prepared
The troubles the state programs face can be traced to a failure during the economic boom to properly prepare for a downturn, experts said.

Unemployment benefits are funded by the payroll tax on employers that is collected at a rate that is supposed to keep the funds solvent. Firms that fire lots of people are supposed to pay higher rates. The federal government pays for administrative costs, and in a recession, it pays for the extension of unemployment benefits beyond 26 weeks. But over the years, the drive to minimize state taxes on employers has reduced the funds to unsustainable levels.

"The benefits haven't grown -- that's not the problem," said Richard Hobbie, director of the National Association of State Workforce Agencies.

Even so, he said, he expects to see unemployment checks reduced.

A shortfall in a state unemployment fund, he said, "usually means cuts in eligibility or benefits."

In Virginia, the unemployment program has borrowed $89 million from the federal government, while Maryland has not borrowed, according to the federal data.

Wayne Vroman, an expert in unemployment insurance at the Urban Institute, said that entering the recession, state programs were on average funded at only one-third the level they should have been, according to generally accepted funding guidelines.

"If you fund a program adequately, you don't need to come to these kinds of difficult decisions," he said.

Before the recession, he said, the funding guidelines "were rarely honored."

While the amount of the states' loans from the federal government is expected to grow rapidly, it is not expected to add to the federal debt. "In the past, the federal government has always gotten its money back," Vroman said.

Struggling to fill the gap
In the meantime, however, more states are struggling to fill the gap. West Virginia imposed a freeze on benefit levels this year, and legislators in South Carolina are considering one.

"We've obviously got problems with the fund," said South Carolina House Majority Leader Kenny Bingham (R), blaming the trouble in part on the state's unemployment rate of more than 12 percent.

The state owes about $654 million to the federal government for unemployment payments.

"We're not trying to cut benefits," he said. But "if you jack rates up, those business that are struggling to hang on, you make things more difficult."