Barack Obama’s stimulus will make us all broke
Or, how to get in over your head without really trying.
From the Wall Street Journal:
Remember how $200 billion in federal stimulus cash was supposed to save the states from fiscal calamity? Well, hold on to your paychecks, because a big story of 2010 will be how all that free money has set the states up for an even bigger mess this year and into the future.
And here is the part that separates logic from reality. The democrats passed the stimulus and most did not even read it. Sound familiar? So states like California who cannot manage their own state are now slapped with unfunded Federal Mandates.
For example, the stimulus offered $80 billion for Medicaid to cover health-care costs for unemployed workers and single workers without kids. But in 2011 most of that extra federal Medicaid money vanishes. Then states will have one million more people on Medicaid with no money to pay for it.
And the democrats are planning on running in 2010 with the idea that the stimulus helped save or create jobs? The Republicans have a great opportunity here to exploit the folly of the stimulus.
A few governors, such as Mitch Daniels of Indiana and Rick Perry of Texas, had the foresight to turn down their share of the $7 billion for unemployment insurance, realizing that once the federal funds run out, benefits would be unpayable. “One of the smartest decisions we made,” says Mr. Daniels. Many governors now probably wish they had done the same.
Perry argued that if Texas had to extend new benefits to get the money, it would prove politically impossible to repeal the benefits once the money ran out, leaving state businesses on the hook to keep paying the extra benefits in later years.
Texas had to borrow $640 million interest-free from the federal government this month to make payments to the unemployed. The state’s fund had been all but depleted by spiking claims and will have to be repaid by new taxes on businesses.
On Friday, Hutchison pointed to a U.S. Department of Labor letter that told U.S. Sen. Mary Landrieu of Louisiana that her state could expand its unemployment benefits to qualify for the stimulus money and then repeal the expansion later, without penalty under the law.
Perry’s decision has led to “higher business taxes, unnecessary debt and an unemployment mess,” Hutchison said.
She said she opposed the stimulus program, but once it passed, Texans would be paying for it whether they accepted the money or not, she said. Turning down the unemployment money was “a purely political decision.”
“It’s not conservative. It’s irresponsible,” Hutchison said. “It’s not just a lack of leadership; it’s a lack of judgment.”
Miner pointed out that a number of large business groups urged the governor to reject the unemployment money.
“The governor was proud to stand with those who create jobs,” he said.
From the Wall Street Journal:
So when states should be reducing outlays to match a new normal of lower revenue collections, federal stimulus rules mean many states will have little choice but to raise taxes to meet their constitutional balanced budget requirements. Thank you, Nancy Pelosi.
This is the opposite of what the White House and Congress claimed when they said the stimulus funds would prevent economically harmful state tax increases. In 2009, 10 states raised income or sales taxes, and another 15 introduced new fees on everything from beer to cellphone ringers to hunting and fishing. The states pocketed the federal money and raised taxes anyway.
Now, in an election year, Congress wants to pass another $100 billion aid package for ailing states to sustain the mess the first stimulus helped to create. Governors would be smarter to unite and tell Congress to keep the money and mandates, and let the states adjust to the new reality of lower revenues. Meanwhile, Mr. Perry and other governors who warned that the stimulus would have precisely this effect can consider themselves vindicated.
When you get in a hole you stop digging. It looks like Obama & the democrats are planning on digging a tunnel to China.