› “The States and the Stimulus” – Wall Street Journal

On January 2nd the Wall Street Journal posted an article about the States’ conditions “post-bailout” era.  One year later the Whitehouse and Congress assured State Governors that bailout money would alleviate the decreasing revenue crisis many States were facing.  As the WSJ put it,

“Ten states have a deficit, relative to the size of their expenditures, as bleak as that of near-bankrupt California. The Golden State starts the year another $6 billion in arrears despite a large income and sales tax hike last year. New York is literally down to its last dollar. Revenues are down, to be sure, but in several ways the stimulus has also made things worse.”

Washington made promise after promise that these bailouts were meant to impede any potential tax hikes.  The net result?  State’s still raised taxes, accepted the money and now have no way to come close to budget for at least the next two years.  Here’s why:

The WSJ article made a point of certain mandates that were included in the acceptance of bailout money.

“[T]he 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.”

“[S]timulus dollars came with strings attached that are now causing enormous budget headaches. Many environmental grants have matching requirements, so to get a federal dollar, states and cities had to spend a dollar even when they were facing huge deficits. The new construction projects built with federal funds also have federal Davis-Bacon wage requirements that raise state building costs to pay inflated union salaries.”

“Congress imposed ‘maintenance of effort’ spending requirements on states. These federal laws prohibit state legislatures from cutting spending on 15 programs, from road building to welfare, if the state took even a dollar of stimulus cash for these purposes.”

States will fall short on unemployment benefits.  States will be unable to make Medicaid payments.  States will be forced to pay Union rates likely to cause lay-offs for non-union employees.  Long story short, the States just can’t make it.

“A study by the Evergreen Freedom Foundation in Seattle found that ‘because Washington state lawmakers accepted $820 million in education stimulus dollars, only 9 percent of the state’s $6.8 billion K-12 budget is eligible for reductions in fiscal year 2010 or 2011.’ More than 85% of Washington State’s Medicaid budget is exempt from cuts and nearly 75% of college funding is off the table. It’s bad enough that Congress can’t balance its own budget, but now it is making it nearly impossible for states to balance theirs.”

Now what’s happening on the hill?  Congress is going to throw out another $100 billion in bailouts to the States.  First, the Federal Government has financially enslaved millions and millions of people through unchecked benefits like welfare, Medicaid, food stamps and many more.  Now they seek control over the States.  If this next round of bailout money is accepted it is likely the Federal Government, in another huge power grab, will be forcing hundreds of UNFUNDED mandates on the States.  They will change legislative policy through intimidation.  They will be exactly what the Founders fought AGAINST.

I would ask Governor Culver to reject any more Federal monies that are offered.  It is a game they are playing in Washington to help them seek re-election.  No more, no less.  If Governor Culver accepts any more bailout money from the Federal government not only will his political career be over but the State of Iowa’s ability to succeed will be hindered for years.