Network News

X My Profile
View More Activity

House passes state aid bill -- but is it enough?

pelosipassesstate.JPG

The House passed legislation giving states $26 billion for Medicaid and teachers today. The Senate had already passed the legislation, so now it's off to the president's desk.

The end product has, after three months of negotiations and compromises, less than half the $50 billion-plus the House originally wanted. Moderate Senate Republicans forced the legislation to be deficit neutral, so the bill shifts money around rather than injecting new money into an economy that needs it. One of the offsets was a $12 billion cut to the food stamp program.

And though the bill will help, it will not do enough. "In fiscal year 2011, state budget gaps are about $121 billion, and by the time the fiscal year is over, they could exceed $140 billion," says Jon Shure, deputy director of the State Fiscal Project at the Center for Budget and Policy Priorities. This will close less than a sixth of the gap. Passing it is an accomplishment for Democrats, but they will also be blamed for the consequences of its inadequacy -- despite the fact that the bill's size is the result of Republican demands.

You'd think state aid would be uncontroversial during the most severe economic crisis since the Great Recession. Not so. Early on, there wasn't much controversy, but as the crisis continued, some began suggesting federal help was just another sloth-encouraging bailout. "We managed our way out of" the crisis, said Jane Jankowski, press secretary for Indiana Gov. Mitch Daniels. "Others didn’t."

That's not true, however. Indiana -- which had an unemployment rate above 10 percent in June -- didn't manage its way out of the crisis. It used federal funds to ride out the crisis. It used lots of stimulus money to plug some of its budget hole. It benefited hugely from the auto bailout, which kept the Midwest's manufacturing sector alive. And in February, Mitch Daniels joined 46 other governors and signed a letter asking for exactly the sort of Medicaid funding that Congress just passed. So throughout the crisis, Daniels and Indiana benefited from, and asked for, exactly the sort of help his administration is now dismissing.

And Indiana was right to take the money. "Managing" the collapse in revenue is another way of saying "cutting jobs and raising taxes." Republicans dislike at least one of those things, and so they might worry that since the start of the recession, 30 states have raised taxes. Forty-three other states have cut higher-education funding, and 33 have cut K-12. There's lots that states need to do to set themselves up for the future, but hiking taxes when consumers are already stressed and firing people amid 10 percent unemployment and tearing apart their educational system is not helping the economy get back on its feet. We don't want states to manage the crisis by worsening it, but that's exactly what further cuts and tax hikes will do. And though this bill will help, further cuts and tax hikes will be needed.

By Ezra Klein  |  August 10, 2010; 4:45 PM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: The Fed speaks
Next: The difference between being a governor and being a congressperson in 1 graph

Comments

"And that's the end goal here, right?"

Actually, Ezra, it isn't. This is another stimulus for public sector employees that just widens an ever broadening schism. Yes, we need teachers. Yes, working teachers do contribute to the economy but private sector people are still not finding jobs and they are starting to get pissed. Also, consider that Federal employees come out better than even state and local workers because they haven't suffered layoffs or pension cuts.

This bill will get some votes but lose many others. Since you can make the case that private sector jobs contribute as much to the economy as government ones, this measure does absolutely nothing.

Posted by: bobsteph1234 | August 10, 2010 5:14 PM | Report abuse

"And that's the end goal here, right?"

Actually, Ezra, it isn't. This is another stimulus for public sector employees that just widens an ever broadening schism. Yes, we need teachers. Yes, working teachers do contribute to the economy but private sector people are still not finding jobs and they are starting to get pissed. Also, consider that Federal employees come out better than even state and local workers because they haven't suffered layoffs or pension cuts.

This bill will get some votes but lose many others. Since you can make the case that private sector jobs contribute as much to the economy as government ones, this measure does absolutely nothing.

Posted by: bobsteph1234 | August 10, 2010 5:14 PM | Report abuse

Only two GOP members voted in favor of the bill (Cao and Castle). More GOP no-shows than Dems.
http://politics.nytimes.com/congress/votes/111/house/2/518

Posted by: tuber | August 10, 2010 5:15 PM | Report abuse

Daniels wants to privatize everything including education. He is not raising taxes, but he is cutting school funding and laying off thousands of teachers statewide. It is an opportunity to bash teacher's unions which is a big hit with conservatives and the Tea Party.

So having IBM take over the Indiana welfare system was a complete failure. Mitch and the press will gloss over those flaws when he runs for president.

Posted by: bakho | August 10, 2010 5:17 PM | Report abuse

As alwyas, the question is, how much debt are you willing to put onto your children in order to preserve every last salary dollar at the DMV?

Posted by: tomtildrum | August 10, 2010 5:56 PM | Report abuse

The money is not needed in Florida as well as many other states. As an example the City of Jacksonville,Florida is giving the local NFL Team an extra 4 million dollars from a stadium naming deal. That money could have gone towards lowering the proposed 12% property tax increase or cuts to the Fire, Police Departments or Library hours, but they elected to give it to a sports team. The city of Miami is building a new baseball stadium, Tampa also wants a new stadium. It isn't that many states don't have money it's that their priorities are misguided. Florida has plenty of funds for Major League Baseball, the NFL, NBA and so one, it just falls short when it come to funding education.

Posted by: southernrican | August 10, 2010 6:22 PM | Report abuse

http://www.usgovernmentspending.com/downchart_gs.php?year=1995_2015&view=1&expand=20&units=d&fy=fy11&chart=20-total&bar=1&stack=1&size=m&title=Education%20Spending%20Chart&state=US&color=c&local=s

US education spending per capita in 2005 dollars:

Year GDP $
1995 7414.7 1856 a
1996 7838.5 1867 a
1997 8332.4 1913 a
1998 8793.5 1997 a
1999 9353.5 2068 a
2000 9951.5 2182 a
2001 10286.2 2236 a
2002 10642.3 2352 a
2003 11142.1 2375 a
2004 11867.8 2416 a
2005 12638.4 2486 a
2006 13398.9 2564 a
2007 14077.6 2542 a
2008 14441.4 2601 a
2009 14258.2 2676 a


Devastation not found.

Posted by: krazen1211 | August 10, 2010 6:31 PM | Report abuse

@tomtildrum:As alwyas, the question is, how much debt are you willing to put onto your children in order to preserve every last salary dollar at the DMV?

As always, the question is how much debt are you willing to put on your children to preserve tax cuts for the top 2% of income earners? The tax cut extension is an order of magnitude bigger drain on the budget than the temporary assistance to states and yet the deficit peacocks never seem to ask or answer this question.

I would also note that the aid to states is completely paid for. I know this is anathema to republicans, but maybe they should propose how to pay for the plutocrat tax cuts....

Posted by: srw3 | August 10, 2010 6:47 PM | Report abuse

@krazen1211:

Pretty much matches inflation....

Posted by: srw3 | August 10, 2010 6:57 PM | Report abuse

"..Daniels wants to privatize everything including education. He is not raising taxes, but he is cutting school funding and laying off thousands of teachers statewide. It is an opportunity to bash teacher's unions which is a big hit with conservatives and the Tea Party."

Now that the legislation has passed will Daniels and other Republican governors accept assistance from the federal government or will they be spiteful bad sports for political purposes and lay off teachers? And from what I have seen, it is not only teachers, but police, firefighters and other essential workers like ambulance drivers, so the message from Republicans is, don't get a heart attack, there will be no one to call because they used to belong to some union.
At the same time every Republican and teabagger supports extending the Bush tax cuts to the rich indefinitely, the leader of the House, artificially tanned John Boehner was asked several times how he can be for reducing the deficit and simultaneously for cutting taxes on the rich, since the government's source of revenue is taxes. Hem, haw, no reply.
The US is already behind many nations in science and math, without teachers we will be rapidly heading to join the "third world" countries.

Posted by: ananair | August 10, 2010 7:30 PM | Report abuse

The genius Klein writes "...the bill shifts money around rather than injecting new money..."

Hey, dummy - the only way the government can "inject new money" is to print it (a.k.a. lowering the value of the currency) Every other tool at the disposal of a government boils down to robbing Peter to pay Paul. Why do you want more robbing of Peter to pay Paul?

http://libertyatstake.blogspot.com/
"Because the Only Good Progressive is a Failed Progressive"

Posted by: libertyatstake | August 10, 2010 8:22 PM | Report abuse

All the ideological shenanigans on both sides of the isle point to the absolute necessity of reforming the Senate. Nothing constructive will get done — by either party — until the rule of the simple majority is restored to the Senate.

While the Constitution gives the House and the Senate the power to institute their own rules to carry out their duties, is it possible for individual citizens — the supposed benefactors of the Constitution — to sue to end the Senate's rules on the filibuster and its effect as an unconstitutional denial of the simple majority?

Posted by: tomcammarata | August 10, 2010 10:19 PM | Report abuse

Teachers, firemen, policemen, and state gov. employed all should just be handed more raise while your at it. We don't want to deny any extra befits too. Just cut the rest of the food stamp program. Can't think of anyone who will need food since we're offering medical after the homeless collapse.

Did it ever occur to these people that some of us out there are self-employed and were never handed or qualified for anything?

Posted by: steveherb | August 10, 2010 10:25 PM | Report abuse

@swr3

Those numbers are adjusted for inflation and population growth.

Posted by: krazen1211 | August 10, 2010 10:55 PM | Report abuse

As to why state bailouts are controversial:

New Jersey budget in 1998: $16.4 billion.

2002: $23.2 billion
2005: $28.6 billion
2008: $34.6 billion

Inflation has been 32% over that decade. The budget more than doubled.

Posted by: krazen1211 | August 10, 2010 11:08 PM | Report abuse

Looks like the Dems really take care of our voter base, at the expense of the people who are also out looking for work, but, sense they are not all Dems, they don't seem to count as much as their solid core base. This is kind of like the way they distributed the Stimulus money, which went 60/40 for Blue/Red states. Isn't it wonderful to have "Hoax and Corruption" we can all believe in....

Posted by: DL13 | August 11, 2010 1:00 AM | Report abuse

Can we please just allow for state governments to run budget deficits during recessions to avoid this mess?

Posted by: drewhigham | August 11, 2010 2:44 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company