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States Want $1 Trillion In Rescue

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The thing to keep in mind here is that the money these folks are talking about is provably needed for basic services like education, infrastructure, healthcare and many more essentials.

From Politico:

“There are states that are talking as California has of not being able to meet their financial obligations in the coming months,” New York Democratic Gov. David Paterson said on a conference call with reporters. California announced in December that all state employees would be forced to take two days of unpaid leave.

Paterson was joined by fellow Democrats, New Jersey Gov. Jon Corzine, Massachusetts Gov. Deval Patrick, Ohio Gov. Ted Strickland and Wisconsin Gov. Jim Doyle in warning that states across the country will be forced to make drastic budget cuts in the face of unprecedented deficits. […]

Strickland added that the situation facing the state of Ohio is so dire that in order to balance his state’s budget, he would have to fund every state program at 75 percent of its current level. “If I were simply to flat fund the operations of this government, I’d end up with $7.3 billion in deficit,” he said. “We’re just trying to keep afloat.”

In order to make up for the shortfalls, Corzine said the incoming Obama administration and Congress will need to free up $1 trillion in federal spending for state assistance. “We’re all going to be Herbert Hoovers if we’re not careful here,” he said.

Obviously the alternative is to make serious cuts in social services that tens of millions depend on. But who’s in favor of that? Because ultimately the burden will be shifted to the federal government in some way since folks will need to get care one way or another.

Isn’t it smarter for the federal government to simply float the states some money to bridge the gap between now and when the economy picks back up again. Because they’ll be far more effective in spending it since it will mostly be used to fill in the deficit gaps in their budgets.