Regionalism and the Federal Takeover of the 50 States
If Congress does not extend the enhanced Medicaid matching funds in the 2009 Recovery Act, most states will cut public services or raise taxes for the fiscal year that begins July 1, 2011, by even more than they are already planning — laying off tens of thousands more teachers and other public employees, cutting education funding more sharply, and further reducing payments to health care providers and other private firms. Without more federal aid, state budget-closing actions could cost the national economy 900,000 public- and private-sector jobs. - Failing to Extend Fiscal Relief to States Will Create New Budget Gaps, Forcing Cuts and Job Loss in at Least 34 States More Cuts in Health, Education and Other Areas Could Stall Nation’s Economic Recovery, Center on Budget and Policy Priorities, August 13, 2010The Case for Washington Bailing Out Some States
The governors of Illinois, California, New York and Connecticut are calling on the feds and other states for "a shift of cash" in their direction since "the people and businesses in our four states have consistently paid more in taxes to Washington than the federal government has spent here."January 10, 2011
Breakingviews Reuters Blog - The newly-installed governors of Illinois, California, New York and Connecticut face huge budget gaps that are worrying financial markets. In extremis, federal government rescues might be called for.
Breakingviews imagines how these Democrat governors from traditionally left-leaning states might justify a plea for help from the U.S. Congress.
Dear Esteemed Members of the 112th Congress:
Like many of you, the four of us have been elected with strong mandates. The voters of Illinois, California, New York and Connecticut have asked us to rectify past mistakes and set sustainable paths for the future. While we are Democrats and most of you are Republicans, we share your wish to address our financial challenges.
Over the next few weeks, we will take difficult decisions, requiring sacrifices from the people of our great states, to balance our budgets — as we are legally required to do. Our progress matters to the nation. Together, our four states account for about a quarter of America’s GDP and about the same proportion of its population.
We plan to sort out our own problems. But let’s not forget that we have also, in less strained times, been among the most generous members of this great union in subsidizing weaker states.
In the 20 years leading up to 2005, the latest year for which the non-partisan Tax Foundation has crunched numbers, people and businesses in our four states have consistently paid more in taxes to Washington than the federal government has spent here. Less prosperous states have benefited from the reverse situation.
It adds up to a lot, too. Combined, we’ve paid nearly $500 billion more to Uncle Sam than successive administrations and your predecessors have chosen to return – and that’s before factoring in inflation. Believe it or not, tiny Connecticut paid a third of that, the highest proportion of the four. We don’t object: we know that when we are doing well it’s part of our national tradition and character to share some of the fruits for the greater good. It’s a lesson the European Union seems yet to have fully understood.
But the shoe is now on the other foot. And even if we completely fail to address our problems for ourselves — which is highly unlikely — our short-term needs would amount to only a fraction of what we have handed to other states in the past. Our signatory from the Land of Lincoln, Pat Quinn, is grappling with the annual $13 billion deficit he inherited. That seems a tiny amount compared with our historical generosity — not to mention the $700 billion turned over to wealthy bankers a couple of years back or the easy money policies of the Fed that benefited rich bond investors like Bill Gross, who has been badmouthing Illinois’ creditworthiness.
Our colleague in Albany, Andrew Cuomo, has to prepare the Empire State’s budget by Feb. 1. It looks as if New York’s $10 billion deficit today could nearly double to $17 billion in a couple of years if left unchecked. We’ve run his PowerPoint projections over our own states and feel his pain.
Indeed, though Connecticut may be the smallest member of our quartet, the state’s near $4 billion deficit looms larger than even California and New York’s relative to the state’s total budget. Dan Malloy’s showdown with the general assembly on Feb. 16 could be particularly tough — again for the sake of less than 1 percent of what we collectively handed to less fortunate states in the 20 years to 2005.
Meanwhile more of our efforts to solve our own money problems — dare we suggest, with greater discipline than seen at the federal level to date — will become clear when the second-timer among us, Jerry Brown, unveils California’s budget this week, something he’s been toiling away on from the statehouse in Sacramento. Even his annual deficit of more than $20 billion pales beside the money we’ve given away to other states — or rather, your august institution has given away on our behalf.
As we, along with the new Congress, tackle difficult fiscal challenges in the face of unrelenting market pressures, we felt it was our duty to our respective voters to recall our past selflessness. The federal government has transferred a lot of our states’ hard-earned wealth to those less fortunate in the past; you and your Washington advisers shouldn’t dismiss out of hand the possibility of a shift of cash in the other direction if one or more of us ends up having to ask you for help.
Sincerely,
Edmund G. Brown, Jr.
Pat Quinn
Andrew M. Cuomo
Dannel P. Malloy
Failing to Extend Fiscal Relief to States Will Create New Budget Gaps, Forcing Cuts and Job Loss in at Least 34 States; and More Cuts in Health, Education and Other Areas Could Stall Nation’s Economic Recovery
August 13, 2010Center on Budget and Policy Priorities - ...Due to the deep and long recession, states have lost tax revenue for the last two years. Revenues are projected to remain at severely depressed levels throughout fiscal year 2011 (which begins July 1 in most states). As a result, states have already laid plans to implement large spending cuts and other measures to keep their budgets in balance, marking the third straight year of budget cuts, and the new cuts will slow the economic recovery and raise the risk of a double-dip recession as the loss of spending power ripples through the economy.
Congress can reduce the economic harm by enacting a six-month extension of enhanced Medicaid matching funds. Those funds would help states pay for dramatic recession-driven increases in Medicaid enrollment in most states and reduce the chances that states will have to cut scarce funds for education and other areas. Because both houses of Congress passed the Medicaid extension separately earlier this year, most states have assumed enactment of this fiscal assistance — worth about $23 billion — in preparing their 2011 budgets, averting some of the most extreme cuts.
The House abruptly dropped this extension from the jobs bill it passed in late May. Most recently, Senate leaders released a jobs bill that includes the extension, but the Senate has not yet voted on it; even if the Senate passes it, it will need to return to the House for final consideration.
At least 34 states — two-thirds — will cut jobs and services, with impacts throughout the economy, if the aid isn’t enacted.
- Twenty-three states (as of June 10, 2010 and including the District of Columbia) have completed work on FY2011 budgets that rely explicitly on the Medicaid extension. If Congress does not extend the funds, governors and legislatures will have to revisit those budgets and consider new cuts.
- Seven states have not yet passed their budgets but assume extension of the Medicaid funds in the governor’s and/or legislature’s budget proposals. Failing to enact the extension will make already-difficult budget discussions even more difficult and require more cuts.
- Virginia and Mississippi didn’t include the extension in their budgets but explicitly stated that they will reverse job-killing cuts in those budgets if the additional Medicaid funds are approved.
- At least two states, Oregon and Wisconsin, enacted two-year budgets last year that now have large budget gaps. Extension of the Medicaid funds would reduce the size of the cuts these states otherwise must impose...
Editor's Note: Private sector jobs and local/state public sector jobs are disappearing, but the federal workforce is expanding as bureaucrats pass legislation to control the lives of the American people (TSA security screeners, grants for green jobs, grants for electronic health technology under Obamacare, Biometric IDs, RFID in driver's licenses and passports, NSA's $1.5 billion data center, expansion of broadband into rural areas for electronic payments via mobile phones, smart electric grid, intelligent transportation systems and high speed rail projects, spy drones and surveillance systems, corrections officers and internment/resettlement specialists for the Army National Guard, national emergency centers on military installations, fusion centers, etc.). [See next post: "Bureaucrats Are Good Guys Working to Fix the Broken Economy and Carry Out Tasks Created by the Economic Stimulus Legislation"]
Taxpayers vs. Bureaucrats, the Video Version
June 1, 2010International Liberty - Regular readers of this blog know about our “Taxpayers vs. Bureaucrats” series. Well, now we have the video version.
There are three things in the video that deserve special emphasis. First, bureaucrats are vastly overpaid. The government data cited in the video show that total compensation for the federal civil service is twice as high, on average, as it is for workers in the productive sector of the economy. There are some bureaucrats who deserve above-average pay, such as scientists dealing with nuclear weapons, but it is outrageous that the average drone in the federal bureaucracy is getting twice as much compensation as the taxpayers (serfs) who pay their salaries.
Second, this mini-documentary debunks the silly argument (put forth by government employee unions, of course) that bureaucrats are underpaid compared to the private sector. The Department of Labor has data looking at voluntary departure rates by profession. If government workers were being underpaid, you would expect them to be more likely to leave their jobs in order to take new positions in the (supposedly higher paid) private sector. Instead, the video reveals that people in the private sector are six times more likely to switch jobs than federal bureaucrats.
Third, the video concludes with the essential point that most federal bureaucrats should be paid nothing because they work for departments and agencies that should not exist.
Read More...
Obama’s Stimulus Means Redistribution from Poor to Rich
September 7, 2010International Liberty - This New York Post chart shows that the already-bloated federal workforce has expanded since the downturn began. And since compensation for federal bureaucrats is twice the average for other workers, it certainly seems like Obama is playing a perverse game of class warfare — particularly since ordinary Americans pay the price when so-called stimulus spending drains money from private capital markets and misallocates resources.
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