Government Dependency

Senate Passes $26 Billion in Aid to States for Medicaid, Teachers and Other Public Sector Jobs

Most Republicans opposed the measure, calling it a payoff to public employee unions and warning that it would make the states ever-dependent on federal funds.

August 4, 2010

Associated Press – Senate Democrats on Wednesday overcame Republican opposition and cleared the way for a $26 billion measure to help states ease their severe budget problems and save the jobs of tens of thousands of teachers and other public employees.

The bill advanced by a 61-38 tally that ensures the measure will pass the Senate on Wednesday or Thursday. The House may return early during from its August recess for a final vote that would deliver the bill to President Barack Obama, his larger jobs agenda curtailed by Republicans who argue against the spending it would entail.

Moderate Republican Sens. Olympia Snowe and Susan Collins of Maine cast the key votes to break the GOP filibuster.

The bill would extend programs enacted in last year's stimulus law to help preserve the jobs of teachers, police officers, firefighters and other public employees.

The legislation is scaled back from versions that stalled earlier this summer as part of a larger tax-and-spend measure extending jobless benefits and a variety of expired tax breaks. The first piece is $16 billion to help states with their Medicaid budgets in the first six months of next year.

It's less generous than the help provided under the stimulus law but is still desperately sought by governors, who have already made big budget cuts as tax revenues have plummeted in the recession and warn of even worse cuts if the federal help is not continued.

The measure also contains $10 billion to help school boards hit with similar budget woes avoid teacher layoffs this fall.

"This legislation makes a difference," said Sen. Patty Murray, D-Wash. "Real people in real jobs. Real paychecks."

But most Republicans opposed the measure, calling it a payoff to public employee unions and warning that it would make the states ever-dependent on federal funds.

The spending is accompanied by tax increases and spending cuts to avoid increasing the budget deficit. The bill eliminates in March 2014 an expanded food stamp benefit enacted last year and limits the ability of some U.S.-based multinational companies to use foreign tax credits to reduce their U.S. taxes.

"That would have the effect of driving jobs overseas," said Sen. Lamar Alexander, R-Tenn.

Democrats, who control the chamber with 59 votes, needed to pick up at least one Republican to muster the 60 votes required to defeat the GOP filibuster.

Wednesday's vote to break a GOP filibuster came after Democratic leaders made final tweaks to the measure in hopes of winning over Snowe and Collins. The duo also provided the key votes last month to pass a six-month extension of jobless assistance for the long-term unemployed.

A vote scheduled for Monday was postponed after an analysis by the Congressional Budget Office showed the measure would add to the deficit. Snowe and Collins also had been concerned about cuts to Navy shipbuilding accounts since the Bath Iron Works in Maine is so essential to the state's economy. Majority Leader Harry Reid got rid of the proposed cuts Monday night.

Reid orchestrated other changes to close an almost $5 billion deficit gap, including new reforms to a tax credit claimed by the working poor.

Collins has been a past supporter of giving states help with their budgets and was the driving force behind an aid package enacted in 2003 that added $20 billion to the deficit.

Both provisions are heavily backed by unions for teachers and public employees, key allies of the Democratic Party. The American Federation of State, County and Municipal Employees ran ads Wednesday in four Maine newspapers urging Collins and Snowe to vote to break the filibuster.

"It's important to be able to provide this support to the states at a very critical time," Snowe said afterward. "I think it also should be done with the understanding that the states are going to have to begin to make some tough decisions."

Obama requested an extension of additional aid for the Medicaid program in his budget and has belatedly rallied behind the money for teachers as well.

Senate Nears OK for $26B in Aid to States: $10 Billion for Teachers and $16 Billion for Medicaid

140,000 teachers would be protected, Medicaid funded

August 5, 2010

Arizona Daily Star - The Senate on Wednesday cleared the last major hurdle to approving a $26 billion aid package for cash-strapped states that is expected to keep 140,000 teachers from being laid off nationwide and sustain medical care for the poor.

Governors from nearly every state had pressed for help in the face of falling revenues and state budgets decimated by the recession and lagging economic recovery. Many states had already counted on the extra federal aid in their spending calculations - raising the possibility of new budget crunches if the measure failed.

"All over the country right now, there are people breathing a big sigh of relief," said Sen. Michael Bennet, D-Colo., a former state schools superintendent, after two Republicans joined with all 59 Democrats to block a threatened GOP filibuster.

The Senate is scheduled to give its final approval to the bill today. And House Speaker Nancy Pelosi said she would call the House, which has already begun its August recess, back into session next week to approve the Senate bill and send it to President Obama for his promised signature.

The aid for the states has been a priority for Obama administration.

The Senate package includes $16 billion for Medicaid, the joint state-federal program to provide health care to low-income Americans. The recession and continuing high unemployment had sent Medicaid costs soaring and created a major problem for many states.

Enhanced Medicaid funding was first made available in the 2009 economic recovery act but is scheduled to expire in December. The Senate bill package would extend aid for six more months through June 2011.

The package also provides $10 billion in education funds, and the National Education Association estimates 138,000 teachers' jobs could be saved.

Thousands of other public workers could have their jobs spared with the extra money flowing to the states, Democrats say.

Many states have already been forced to make tough budget-cutting decisions and were counting on help from Washington.

"The easy choices have essentially been made by the states," said Arturo Perez, a fiscal analyst at the National Conference of State Legislatures. "We're talking about a situation where state policymakers face even more difficult decisions about how to balance their budgets if that money is not available."

Union-backed advocacy groups produced ads this week urging Republican Sens. Susan Collins and Olympia Snowe of Maine to cross over and support the measure. Both did, giving Democrats the 61-38 supermajority they needed to invoke cloture and clear the way for final passage.