Wednesday, June 16, 2010

U.S. Senate Stiffs the States, Unemployed

This is not good. Besides the unemployed who need this to pay the bills and keep their homes, 30 states - including Michigan - are counting on this money to balance their budgets.

Republicans and a dozen Democratic defectors in the Senate dealt a defeat to President Barack Obama Wednesday, just days after he pressed Congress to renew pieces of last year's economic stimulus bill.

A catchall measure combining jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks for businesses and individuals failed to muster even a majority in a test vote, much less the 60 votes that would be required to defeat a GOP filibuster.

Now, Obama's Democratic allies have been forced back to the drawing board in their efforts to pass the measure, which also would protect doctors from a looming cut in Medicare payments and raise taxes on investment fund managers. A new, scaled back version of the measure is likely to be revealed Wednesday afternoon.

Finance Committee Chairman Max Baucus, D-Mont., said after the vote that "Plan B" is to do some "shuffling, rearranging of some of the provisions" of the bill but not making wholesale changes.

Just on Saturday, Obama made a plea for the measure, including $24 billion in aid to cash-strapped state governments to help avoid tens of thousands of layoffs and ensure the economy doesn't slip back into a recession.

The petty bastards are talking about cutting $25 a week from the unemployment benefits, and maybe giving doctors a "short reprieve" from the massive cuts to Medicaid payments, instead of relief through the end of next year, guaranteeing that we run up against this problem again real soon. Just like we keep doing with unemployment extensions. Which is driving people crazy.

But the big damage might come from a slow-down in a fragile nationwide recovery. If the states don't get this aid, the President warns that they will lay off thousands of "teachers, police and firefighters" and that could send us towards a double-dip recession. The Center for Budget and Policy Priorities reports that these types of layoffs have already slowed the economy one-half to one percentage point in the 1Q of 2010 alone, with estimates that up to 900,000 public and private sector jobs are at risk. If we don't get this aid, the cuts will go deep indeed...

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.

* Sevens 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.

Yes, Michigan is in the mix as well. Don't even want to think abut us having to revisit the numbers on our budget if this doesn't come through. And I don't know about you, but I'm getting awful damn tired of fighting with our own team about this stuff - the need out here is very real, and to pull the plug on economic recovery efforts at this point risks a repeat of a 1937 performance. Krugman called it at the beginning of the year...

There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.

But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.

Right now, Democrats are enjoying leads in the AP-GfK polls when it comes to which party Americans want controlling Congress. But put those Americans through massive state and local fights over more cuts and/or raising taxes, as well as pulling unemployment benefits, right before an election? Are you kidding me with this?

It's hard to understand how the US Senate can be so politically and fiscally tone-deaf at the same time. And it sure would be nice if we had a party that supported its leadership. I swear, the conservadems do more damage to the party than the Republicans can even dream of.