States Getting Screwed In Stimulus Trim-Down

If Republicans in Washington are offering a united front for neo-Hooverism and against any real effort to save the economy and prevent a Depression, Republicans out in the state who actually have to govern are doing anything but. Arnold Schwarzenegger and 18 other Democratic and Republican governors have come out in support of the recovery package, leading Dan Walters to call him Keynesian. Actually Arnold is just slightly less than insane, recognizing that without massive investment from the public sector, California will never be able to cover its budget deficit and revitalize its economy.

We support the objectives of ARRA and welcome the partnership it offers us as governors. The support for a temporary increase in the federal commitment for public education, health care (including cost control through initiatives such as health records IT), and for rebuilding our public infrastructure will create and preserve jobs today, and represents a sound investment in our long-term economic interests as well. We look forward to working with Congress and your Administration to advance an economic recovery package that puts federal dollars to work in our states in the quickest and most efficient manner as possible.

But this is being threatened in a big way. Yesterday we learned that enough moderates were blanching at the cost of the package to threaten its passage. President Obama met with the ringleaders of this neo-Hooverist movement, Sens. Ben Nelson and Susan Collins, and talked them part of the way off the ledge. They were planning up to $200 billion in cuts, but now have pared that down to closer to $100 billion. And in exchange for meaningless tax cuts and stupid initiatives like tax breaks for home and auto buyers (reinflating the bubble at great danger to the economy), they want to screw the states:

Sens. Ben Nelson (D-NE) and Susan Collins (R-ME) have come up with a list of about $100 billion in programs they want slashed from the stimulus package, according to a working draft of a staff paper outlining the cuts.

Among the biggest cuts under discussion: $24.8 billion in state stabilization money for education, which was intended to plug existing budget holes; $15 billion in state incentive grants for education; and $1.4 billion for the National Science Foundation, which is wracked by a porn-viewership flap. Pell Grants were the biggest program to survive the debate over cuts, with $13.9 billion staying intact.

Senate Democratic leaders are likely to bring this package up for a floor vote today, aiming to achieve a filibuster-proof margin in support of these cuts before pushing to pass the entire stimulus by day's end. Hang onto your hats.

Ben Nelson is now backing away from this draft, and it's no wonder. This would cripple states like California facing bug budget deficits. They didn't want to release these cuts until now because states having to fire cops and firefighters and teachers is deeply unpopular. But that's what slashing the stabilization fund would do. Given that budget money is fungible, that wouldn't just affect education but practically everything that states do.

This is typical of an anti-democratic body like the Senate, where the relative power of a state with 400,000 residents like Wyoming and one with 38 million like California is the same. California has a budget deficit bigger than the expenditures of 39 states and has all sorts of needs that could be filled by this package, creating hundreds of thousands of jobs and acting as a backbone for economic recovery. But you have small-state neo-Hooverist idiots like Charles Grassley who think their job is to sink the economy, apparently:

The House bill, written by the committee chaired by Rep. Henry A. Waxman (D-Beverly Hills), gives considerably more money to states whose unemployment rates have increased significantly. That would put California, with a 9.3% jobless rate in December, in the top tier of recipients -- along with New York, Florida and others.

The House "took an approach that recognizes that in the current recession, all states need some help, but some need more help than others," Waxman said. "It is only fair that the hardest-hit states with high unemployment receive more assistance than those with low unemployment."

But senators in some smaller states say the House provision would shortchange their constituents. "The legislation is biased to big states," Sen. Charles E. Grassley (R-Iowa) argued.

That's like saying the legislation is biased to people.

None of these people are explaining WHY the price tag has to shrink; it just does. And if it needs to go down, there are useless, not-multiplier tax cuts for businesses and people that can afford new cars and homes that have little to no stimulative value. They didn't have to insert them in the first place.

It would be absolutely absurd to cut off states - who are not to blame for the financial meltdown, and who cannot deficit spend - in exchange for giving away more tax cuts, with the same failed philosophy that got us into this mess. Now that these cuts are out in the open, there should be outrage.