Trump threatens to pull unemployment benefits from all states for the first time in history

[Wiz Imp]

25. This is beyond crazy, I'd consider it criminal

Unemployment benefits are funded 100% by each individual state by taxing employers. States with higher taxes provide higher benefits. It is only during periods of high unemployment that the Federal Government will fund extended benefit programs. The last time this happened was during COVID. That extended benefit program ended in 2021, so since then, the Federal Government has funded 0 Unemployment benefits.

However, the Federal Government provides 100% of the funding to operate the state programs. I assume this is what they are threatening to cut. States can't operate these programs without the Federal money. But None of the Federal funding covers any fraudulent benefits.

https://federalnewsnetwork.com/financial-management/2026/06/us-tells-states-to-deal-with-unemployment-fraud-or-face-penalties/

Government audits of a sample of cases from last year suggested that nearly $1 in $9 in the programs was an overpayment — and that most of those were for reasons other than fraud. They varied by state, but many involved work-search requirements or eligibility disputes after someone left a job.

There also doesn’t appear to be a strong connection between which party governs a state and how much overpayment or fraud there is.

California Gov. Gavin Newsom ’s office blasted the move and criticized “lax regulations and rushed distribution” of unemployment benefits by the first Trump administration during the COVID-19 pandemic.