Collapse of the U.S. Economy

How Much Stimulus Funding is Going to Your State?

Obama Signs Emergency 'Jobs' Bill to Give $26 Billion in Aid to States

August 10, 2010

AP – Summoned back from summer break, the House on Tuesday pushed through an emergency $26 billion jobs bill that Democrats said would save 300,000 teachers, police and others [public sector workers] from election-year layoffs. President Barack Obama immediately signed it into law.

Lawmakers streamed back to Washington for a one-day session as Democrats declared a need to act before children return to classrooms minus teachers laid off because of budgetary crises in states that have been hard-hit by the recession.

Republicans saw it differently, calling the bill a giveaway to teachers' unions and an example of wasteful Washington spending that voters will punish the Democrats for in this fall's elections. The legislation was approved mainly along party lines by a vote of 247-161.

The aid for the states is to be paid for mostly by closing a tax loophole used by multinational corporations and by reducing food stamp benefits for the poor ...

House Kills a $24-billion Fund to Help Cash-strapped States Cover Costs

States are lobbying hard to have it restored, warning of further devastating cuts to healthcare and social services

June 3, 2010

Los Angeles Times - With the federal deficit a growing political liability, lawmakers in Congress are backing off plans to send more aid to financially strapped states, putting in jeopardy billions of dollars that California and others were counting on to balance their budgets.

The potential loss of funds is a significant setback for Gov. Arnold Schwarzenegger and state lawmakers, who may not see nearly $2 billion in federal assistance that they intended to use to help bring California out of the red.

The money was to be California's share of $24 billion in proposed assistance, mostly to cover healthcare spending, spread among all states. Budget experts say that is enough to wipe out about one-fourth of the combined state budget shortfalls.

In California and elsewhere, officials thought the funds were a sure thing. The money was one of the few elements of Schwarzenegger's budget plan on which there was bipartisan agreement. But House Democratic leaders last week stripped the money out of legislation amid election-season jitters.

"This is a serious problem," said Jean Ross, executive director of the California Budget Project, a Sacramento-based nonprofit. "The fear of deficits seems to be overtaking Washington. They are not realizing the bigger threat is the economy could slide back into recession as a result of state and local budget cuts."

In California, the governor has already proposed eliminating the state's welfare program, cancelling state-subsidized day care for hundreds of thousands of low-income children, freezing school spending, and making a number of other deep cuts to close a $19.1-billion budget gap.

Failure to get the federal money would surely force more drastic proposals. But even if the state eliminated its entire home healthcare program, which serves 440,000 elderly and disabled Californians, it wouldn't make up for the $1.9 billion the state is now scrambling to secure.

The states have launched a frantic lobbying effort to persuade the U.S. Senate to provide the assistance.

"You've got virtually every governor in the country calling on Congress to do this," said H.D. Palmer, deputy director of the California Department of Finance. "This is not just a California issue. It is a national issue."

The states' efforts come as the Democrats who control Congress face resistance to increased spending from fiscally conservative members of their own caucus, many of whom face tough reelection campaigns in districts where they campaigned on pledges of fiscal discipline. Republicans, meanwhile, have highlighted the federal budget deficit, which could reach $1.5 trillion, in this year's mid-term election campaigns.

Michael Bird, federal affairs counsel for the National Conference of State Legislatures, said securing the funds would be a challenge.

"We've got our work cut out for us," he said.

Thirty states have been counting on the additional Medicaid money in their budgets, according to the conference. The money was originally provided in last year's economic stimulus bill — but only through the end of this year.

With unemployment still high, a bipartisan group of governors, with President Obama's support, has sought to extend the funding through mid-2011.

The $24 billion was stripped from a package of unemployment aid and tax breaks by House Democratic leaders in response to the demands of fiscally conservative members of their party to reduce the bill's overall cost. The bill was approved by the House last week and is awaiting action in the Senate ...