In the News: “Payback for Gavin Newsom’s Fiscal Folly”
June 9, 2026
Beset on all sides by regulators, highest-in-the-nation taxes, environmentalists, identitarians, and a political establishment committed to class war, California business owners may want to send thanks and a muffin basket to Representative Vince Fong.
Fong, a Bakersfield, Calif., Republican, has introduced HR 8892, the Creating Accountability in Loan Repayment Act. CAL Repayment (you get the acronymic joke) would require states with outstanding federal unemployment-insurance debt to use future flexible federal aid to repay those loans before spending the money elsewhere.
At present, California is the only member of that club — which is why some Capitol Hill insiders call Fong’s bill the Gavin Newsom Reform Act.
Governor Newsom borrowed $20 billion in May 2020, making him the first governor to tap a Covid-era federal loan program designed to backstop losses on state unemployment insurance funds. By October of that year, 22 other governors also had received loans. But after New York Governor Kathy Hochul crafted a grand bargain to repay her state’s loan last summer, Newsom found himself the program’s only deadbeat.
Then came Fong.
“What was intended to be a lifeline for unemployed workers during the pandemic has now left California with more than $18 billion in unpaid federal unemployment insurance debt,” Fong said in announcing his bill.
What really ticks off Fong is that Newsom’s profligacy — his dishonesty — has injured millions of innocent others. That’s because a federal law requires employers in delinquent states to repay their states’ loans through a surcharge on federal payroll taxes. In 2022, that surcharge on California businesses was $21 per employee. The law automatically raises that surcharge by $21 per year until the debt is repaid. However painful to those businesses, the slow, reptilian squeeze of the federal surcharges doesn’t even keep pace with interest on the principal loan amount. With interest, that original $20 billion federal obligation will grow to about $23 billion by December 31. By then, the surcharge will be $105 per employee.
Everyone loses. Billions of dollars that might have gone toward wages, bonuses, capital investments, or the bottom line have flowed instead to the federal government. Fong’s CAL Repayment Act would end the madness.