When the economic recovery act (i.e. the stimulus) was initially passed, Gov. Rick Perry (R-TX) garnered a lot of headlines and the adoration of conservatives for loudly proclaiming that he would reject a portion of the funding meant to help states extend unemployment benefits. Though Perry was eventually forced by the Texas state legislature to accept the funding, he continued to rail against it.
Perry’s blustering belied the fact that Texas was only able to balance its budget because of the Recovery Act. And now that Congress is contemplating a tax extenders package that includes $24 billion to aid states with their Medicaid costs, Perry is up to his old tricks:
Texas Gov. Rick Perry (R), who was one of six governors who considered turning down stimulus dollars last year, may also reject the new round of funds. Perry’s office said Washington’s push for more spending was exacerbating healthcare problems. “This temporary [Medicaid] proposal, like their new health care bill, spends money they don’t have,” Perry spokeswoman Lucy Nashed said.
Perry’s stance has put him at odds with other Republican governors, including Gov. Arnold Schwarzenegger (CA). “I understand the need to pay for and restrain federal spending,” wrote Schwarzenegger in a letter. “But cutting the only funding designed to help states maintain the very safety-net programs Congress mandates us to preserve will have devastating consequences.” A spokesman for Gov. Jim Douglas (R-VT) added that “many states built this expectation of funds in their budgets, and without it, [there would be] either tax increases or the cuts to state government programs that would be pretty devastating.”
In a letter to lawmakers over the weekend, Obama pushed for Congress to provide more aid to states, and indeed, if states don’t receive help, they are going to be a substantial drag on the economy for the next couple of years. According to Mark Zandi, Chief Economist at Moody’s Economy.com, “state and local cutbacks may trim growth by about a quarter percentage point in 2010 and 2011 after shaving it by 0.02 point in 2010.” “The budget cutting that is dead ahead will be a significant impediment to economic growth later this year into 2011,” he said. An early sign of this potential drag was state and local governments cutting 22,000 jobs last month.
More at The Wonk Room.