Assuring recovery funds address immediate crisis
By Nathan Newman, Progressive States Network
As the Center for Budget and Policy Priorities outlined in a recent report, federal aid is covering roughly 30-40 percent of state budget shortfalls. Virginia, for example, has been able keep open three mental health facilities, reverse a planned cut in Medicaid payments, lessen reduction in universities aid, avoid a major education budget cut, and avoid laying off an estimated 310 deputy sheriff positions.
For the economy, some of the most immediate money flowing into states is via the expansion of food stamps benefits in the recovery plan: 32.5 million people in April got a 13.6 percent monthly increase in benefits, averaging about $20 per person. Since the federal government pays 100% of food stamp benefits, states that vigorously sign up people who qualify can stave off some need to use other benefits directly funded by the states. While many states are stepping up outreach efforts, only 60 percent of eligible Americans received food stamps in 2004, the most recent year data are available. Signing up more people is a direct way to expand federal stimulus spending in states.
Assuring States Maintain Spending to Fuel Consumer Demand: While the federal government is dramatically expanding support for programs like education, food stamps, and Medicaid for state governments, the key caveat is that states can't use the funds just to paper over state cuts for the programs. In using state fiscal stabilization funds, states must assure that in fiscal years 2009, 2010, and 2011, they will maintain state support for elementary, secondary and public higher education institutions at fiscal year 2006 levels. The goal is to assure that the federal stimulus to expand the economy is not just undermined by state governments cutting spending -- avoiding what economist Paul Krugman calls "fifty Herbert Hoovers" promoting austerity economics and deepening the economic downturn.
"States Rights" versus Accountability: Some state leaders like Texas Governor Rick Perry have tried to argue that any conditions on federal money is a violation of states rights; Perry even supported a resolution arguing that federal courts, rather than state courts which are not seen as sympathetic to his position, should decide whether the governor can prevent the state from spending the money. Asserting "sovereignty" for the state of Texas and arguing all federal legislation that "requires states to pass legislation or lose federal funding be prohibited or repealed." It is a bit strange to see some conservative leaders -- who usually argue that government spending should be tied to reciprocal responsibility by recipients -- suddenly demand that federal dollars be a blank check with no accountability for states receiving it. Of course, even most conservative leaders have agreed to the accountability measures required to qualify for federal recovery dollars. Ironically, South Carolina Governor Mark Sanford -- who is seeking to reject $700 million in education spending approved by his own state legislature -- has argued that federal courts, rather than state courts which are not seen as sympathetic to his position, should decide whether the governor can prevent the state from spending the money.
Fight over Unemployment Funds: That the strongest resistance to federal funds has come over funding unemployment insurance for many of the poorest unemployed workers is evidence that the fight over "states rights" is actually a fig leaf for ideological attacks on those most in need. As the National Employment Law Project has documented, incentives in the recovery act to encourage states to extend unemployment benefits to poor and part-time workers often excluded from unemployment systems, has been a major success of the recovery plan, with states across the country reforming their laws to improve equity in their systems. While both Republican and Democratic leaders in many states have readily expanded such benefits, it is a few ideologues on the right, such as Perry in Texas or Gov. Bobby Jindal in Louisiana, that have used the unemployed as whipping boys for their rhetoric.Even as many families continue to suffer post-Katrina in the state, Jindal chose to forego $100 million in federal unemployment dollars and vetoed the unemployment insurance modernization bill passed by the state legislature. As Dan Lavoie of Policy Link argues, "This is a looming disaster for folks who've had too much disaster in their lives already."
As the Center for Budget and Policy Priorities outlined in a recent report, federal aid is covering roughly 30-40 percent of state budget shortfalls. Virginia, for example, has been able keep open three mental health facilities, reverse a planned cut in Medicaid payments, lessen reduction in universities aid, avoid a major education budget cut, and avoid laying off an estimated 310 deputy sheriff positions.For the economy, some of the most immediate money flowing into states is via the expansion of food stamps benefits in the recovery plan: 32.5 million people in April got a 13.6 percent monthly increase in benefits, averaging about $20 per person. Since the federal government pays 100% of food stamp benefits, states that vigorously sign up people who qualify can stave off some need to use other benefits directly funded by the states. While many states are stepping up outreach efforts, only 60 percent of eligible Americans received food stamps in 2004, the most recent year data are available. Signing up more people is a direct way to expand federal stimulus spending in states.
Assuring States Maintain Spending to Fuel Consumer Demand: While the federal government is dramatically expanding support for programs like education, food stamps, and Medicaid for state governments, the key caveat is that states can't use the funds just to paper over state cuts for the programs. In using state fiscal stabilization funds, states must assure that in fiscal years 2009, 2010, and 2011, they will maintain state support for elementary, secondary and public higher education institutions at fiscal year 2006 levels. The goal is to assure that the federal stimulus to expand the economy is not just undermined by state governments cutting spending -- avoiding what economist Paul Krugman calls "fifty Herbert Hoovers" promoting austerity economics and deepening the economic downturn.
"States Rights" versus Accountability: Some state leaders like Texas Governor Rick Perry have tried to argue that any conditions on federal money is a violation of states rights; Perry even supported a resolution arguing that federal courts, rather than state courts which are not seen as sympathetic to his position, should decide whether the governor can prevent the state from spending the money. Asserting "sovereignty" for the state of Texas and arguing all federal legislation that "requires states to pass legislation or lose federal funding be prohibited or repealed." It is a bit strange to see some conservative leaders -- who usually argue that government spending should be tied to reciprocal responsibility by recipients -- suddenly demand that federal dollars be a blank check with no accountability for states receiving it. Of course, even most conservative leaders have agreed to the accountability measures required to qualify for federal recovery dollars. Ironically, South Carolina Governor Mark Sanford -- who is seeking to reject $700 million in education spending approved by his own state legislature -- has argued that federal courts, rather than state courts which are not seen as sympathetic to his position, should decide whether the governor can prevent the state from spending the money.
Fight over Unemployment Funds: That the strongest resistance to federal funds has come over funding unemployment insurance for many of the poorest unemployed workers is evidence that the fight over "states rights" is actually a fig leaf for ideological attacks on those most in need. As the National Employment Law Project has documented, incentives in the recovery act to encourage states to extend unemployment benefits to poor and part-time workers often excluded from unemployment systems, has been a major success of the recovery plan, with states across the country reforming their laws to improve equity in their systems. While both Republican and Democratic leaders in many states have readily expanded such benefits, it is a few ideologues on the right, such as Perry in Texas or Gov. Bobby Jindal in Louisiana, that have used the unemployed as whipping boys for their rhetoric.Even as many families continue to suffer post-Katrina in the state, Jindal chose to forego $100 million in federal unemployment dollars and vetoed the unemployment insurance modernization bill passed by the state legislature. As Dan Lavoie of Policy Link argues, "This is a looming disaster for folks who've had too much disaster in their lives already."
