Senate Proud To Sink The States

Both the Washington Post and the LA Times have stories today about the budget crises facing the states, where governors and legislatures have exhausted every gimmick and now must enact painful cuts that will work against the federal program to bring us out of the economic downturn. The personal stories are significant:

Nevada resident Margaret Frye-Jackman, 71, was diagnosed in August with ovarian cancer. She had two rounds of chemotherapy at University Medical Center, the only public hospital in the Las Vegas area.

Soon after, she and her daughter heard the news on TV: The hospital's outpatient oncology services were closing because of state Medicaid cuts. Treatment for Frye-Jackman and hundreds of other cancer patients was eliminated [...]

"If this is what it's like in Nevada, with cancer stuff closing, is it like that everywhere?" said Frye-Jackman's daughter, Margaret Bakes, accompanying her mother to the doctor's recently. "Are all the other states closing stuff too?"

The answer, in at least 39 states, is "yes" -- or "soon." With personal, sales and corporate income tax revenue plummeting, state governments -- which recently trimmed their budgets to cover a cumulative $40.3-billion shortfall for the current fiscal year -- are now watching in horror as a $47.4-billion gap opens for 2009.

And for fiscal year 2010, they will face a $84.3-billion hole, according to the National Conference of State Legislatures. The total shortfall through fiscal 2011 is estimated at $350 billion, according to the Center on Budget and Policy Priorities, a nonpartisan think tank in Washington.

This article frames it as there being "no choice" but tough budget cuts or tax increases for states facing shortfalls, states that cannot print money or run budget deficits. But that's not entirely true. There was a good deal of help being offered by the federal government in the House stimulus bill, which included $79 billion in state fiscal stabilization aid. But among their other cuts, the Axis of Centrism cut that aid in half, by $40 billion dollars, and in so doing guaranteed additional layoffs to teachers and firefighters and cops and nurses and all sorts of other professions which rely on a state paycheck.

California law mandates that layoff notices to teachers be given out by March 15 for the next school year. Arnold Schwarzenegger is proposing $10 billion in education cuts. Republicans, which use our state's rule requiring a 2/3 vote of the legislature to pass a budget, are demanding these cuts as the price of a tax increase to close the remaining $40 billion and ensure that the cuts aren't bigger.

But all of us were hoping and expecting that the US Congress would come through with aid to stabilize state budgets, to help ameliorate the problem and save teacher jobs by providing stimulus money. It must be in the stimulus because, as I just noted, the layoff notices will go out within 5 weeks - there is no time to include it in another bill.

Now we are told that Ben Nelson and Susan Collins, two Republican Senators, have reached a deal to cut that education assistance and that the Senate is likely to accept it.

In short, what they have done is guarantee to my sister and to thousands like her that they will receive a pink slip within five weeks.

To call this fearmongering, as John Ensign did on Meet the Press today, just denies reality, par for the course for both Republicans and bipartisan fetishists like Claire McCaskill, who was at first giddy about cutting 600,000-700,000 jobs in the stimulus, and then passive-aggressively "defended" it by saying the alternative was no bill.

Claire McCaskill is now defending herself against Krugman on Twitter:

Just saw Krugman's comments on reduction in recov act. Question for him. Would no stimulus act be better than one thats 800 B instead of 900.

She follows that up with

Compromise had to happen or we would NOT have 60 votes. Period.

And for further evidence of how much the bill is the same, she claims:

Original Senate bill was 60% appropriationss, 40%tax cuts. Compromise was 58, 42.Senate bill is 90% the same as House bill.

I'm glad that's she expressing herself here, and that we're able to somewhat have a dialogue. But I'm not sure how much in good faith it is. McCaskill began by stating how glad she was that they got a $100 billion cut out of the bill, that the "silly stuff" that Republicans didn't like is now out. She then switches to a passive aggressive mode in defending the cuts - it's basically the same bill and it wouldn't have made it through the Senate - but glosses her own role in making the cuts. From the way she talks about the bill, wouldn't she have been among those voting against the bill if the cuts hadn't been made and new non-stimulative tax cuts hadn't been added in?

McCaskill doesn't want to admit her role in putting 600,000 Americans out of work on Friday, which will harm public safety and increase class sizes and shut down bus and rail lines and send the sick and uninsured looking in vain for treatment and a host of other inadvisable outcomes. And there's no rational economic reason for it, just that the Axis of Centrism choked on the price tag and had to compensate for the non-stimulative tax cuts the Senate tossed into the bill. Massive job loss or increased property tax rates (as states compensate for the loss to education funds) is on McCaskill and Nelson and Collins and Spector's hands.

The big question is what will come out of the House-Senate conference next week, whether the cuts, especially the state government relief, will be restored at the expense of things like the $70 billion dollar patch to the alternative minimum tax. Larry Summers left that an open question on ABC this morning.

One of President Barack Obama's top economic advisers forecast Sunday a difficult struggle with Congress over Senate cuts of $40 billion for state and local governments from the administration's massive spending and tax cut package to stimulate the failing economy.

The $827 billion Senate version of the plan -- designed to bring the economy out of the worst downward spiral since the Great Depression -- was expected to pass the Senate on Tuesday. The House had already passed its $819 billion version of the measure.

And in the opening moments of This Week, an exchange between George Stephanopoulos and Larry Summers went like this:

STEPHANOPOULOS: ...does that mean the President prefers the Senate version to the House version?

SUMMERS: No, the President feels that above all, we need a major program enacted very quickly that would create 3 to 4 million jobs. He believes we need to perfect it in every way we can.

If the cuts are restored, suddenly the sense of urgency works back in the direction of passing a bill more like the House version. The Republican business lobby is urging passage. I don't think the moderates signed on to the bill could break ranks on the final vote if the changes in conference are limited to, say, swapping the state cuts for the AMT patch, combined with an assurance from the President that they will make that fix down the road.