Cutbacks and Tax Hikes Coming Soon to a State Near You

Ed Kilgore explains the tide of anti-stimulus we’ll be seeing soon from state government after Ben Nelson and Senate Republicans blocked the latest jobs bill:

Originally, the jobs bill was intended to extend the state aid contained in the original stimulus package. But as the bill was racheted down, the version limping onto the Senate floor included only $16 billion for a partial extension of the Medicaid “super-match” designed to prevent major benefit and eligibility reductions for the federal-state safety net health care program.

Unfortunately, 34 states planned on receiving that money, and its failure to materialize is going to create a whole new round of state budget crises. In many states, we can expect Medicaid cuts and/or reductions in other state spending, quite likely including layoffs of teachers and other public employees. That’s why most Republican state officials did not share the happy-talk of their brethren in Washington about opposing “bailouts of the states.”

For a lot of conservatives, however, it’s simply axiomatic that “government” has gotten “too big” and that worsening or prolonging the current recession is a small price to pay for seizing the opportunity to slim it down over the longer term. More realistically, my view is that depriving the public sector of the funds necessary to undertake functions the public demands will simply lead to increasing reliance on clumsier, less efficient, and less effective “cost free” regulatory mechanisms.