"House GOP Spending Plan Would Force States To Make Deeper Cuts In Education, Housing, and Transportation"
In their “Pledge to America,” House Republicans insist that one of the ways in which they plan to reduce the federal deficit is rolling non-defense discretionary spending back to the 2008 level. As Rep. Kevin McCarthy (R-CA) put it when pressed for specific budget items that he would cut, “the line item will be across the board.”
Of course, this practically means that vital and popular programs and agencies — such as Pell Grants, the FBI, Immigration and Customs Enforcement, and the National Park Service — will be subjected to huge cuts. (McCarthy, for his part, gets upset when someone points this out to him.) And as the Center on Budget and Policy Priorities noted, on its face, the Pledge also translates into a substantial cut in federal aid to states, causing those states to be even more of a drag on economic recovery than they are already:
If lawmakers were to cut appropriations for state and local governments by 21.7 percent (that is, if lawmakers reduce those appropriations in proportion to the overall reduction that would be required for non-security programs), those appropriations would be $31.6 billion below what President Obama proposed for 2011. Moreover, House GOP leaders have not specified whether they would include transportation programs in the category of programs subject to the reduction. If obligations for those programs faced the same 21.7 percent reduction, that would mean an additional $11 billion in cuts for state and local government activities related to highways, mass transit, and airports.
To put this into more tangible terms, “If Congress cut federal funding for each state- and local-run program by 21.7 percent in 2011, K-12 education would be cut by $8.7 billion, housing programs by $6.9 billion, children and family services by nearly $2.2 billion, and the nutrition program for at-risk pregnant women, infants, and young children (WIC) by $1.6 billion.”
Due to the deteriorating condition of their budgets and the fact that most of them have a constitutional balanced budget requirement, the states have been a substantial drag on the economy. In fact, cutbacks at the state and local level basically offset the effect of the American Recovery and Reinvestment Act, so that little net money was pumped into the economy. And state cutbacks also have tangible effects on the private sector: Cisco reported disappointing sales and profits in the last quarter as a result of state government orders falling 48 percent.
Over the last few months, local governments have been hemorrhaging jobs — 14,000 just last month, excluding education — which leads to decreased personal spending and higher social safety net expenditures by states and the federal government. Actually implementing the House Republican vision of the federal budget would simply exacerbate this problem.