Maintaining Effort
An excellent point from Ed Kilgore about how to do the necessary aid to state and local governments in the context of a stimulus package:
I’d go further than Matt on this subject and observe that states have significant control over some of the “automatic stabilizers” that he’s attributing to the federal government (e.g., Medicaid, SCHIP and transportation programs); without some new assistance, states may not only counter-act the “automatic stabilizers” but could actually subvert them. That’s clearly what some Republican governors like Mark Sanford have in mind when they call for abolition of federal “mandates” rather than federal assistance: let us completely decimate Medicaid beyond what we are already allowed to do, and we’ll be fine!
So an effective stimulus package must not only provide heavy assistance to state and local governments; it must also be sufficiently conditional to ensure that the Mark Sanfords of the world don’t use the money to cut taxes as well as services.
Indeed. Of course a governor really fanatically committed to the idea that pro-cyclical spending cuts and making sure poor people can’t get medical treatment is the key to economic success is going to find a way to do it. But congress will have a lot of power to shape state policy through an aid package, and it’s important to use it wisely.
19 Responses to “Maintaining Effort”
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December 4th, 2008 at 4:03 pm
I tried to strangle Governor Sanford through the TV the other night. He was complaining that citizens of good states like his that were fiscally conservative shouldn’t be on the hook for bailing out those other bad states with big deficits. This from a state that receives $1.35 for every $1 they pay to the feds.
December 4th, 2008 at 6:09 pm
That is one orange governor.
December 4th, 2008 at 6:56 pm
Luckily, as more Yankees move to Charleston and retire to the beach communities around it, South Carolina will one day be a blue state and along with growth in Atlanta flipping Georgia, the entire eastern seaboard will be blue, along with its western counterpart.
And Gov. Sanford is eventually going the way of Sen. Allen. Bet on it.
December 4th, 2008 at 8:14 pm
Luckily, as more Yankees move to Charleston
God, forbid! We can go blue without the help of carpetbaggers. Before you know it, there’d be toll roads and skyscrapers everywhere. Though the Southern migration of unhappy Midwestern and Northeasterners has kept our housing prices relatively stable.
Sanford’s a tool. His plan for property tax relief in SC was for the state to compensate the cities on the first $100,000 of property value out of an increase in the sales tax. He wanted to effectively shift the tax burden from million dollar beach homes to poor people and tourists. Not surprisingly, sales tax revenue is down because nobody is driving in to go golfing while cities see no political liability to raising their millage rates and sending Columbia the bill. There was a front page article in the Post and Courier yesterday about all the mental health facilities that are about to be closed. Some state agencies are seeing cuts of 40% or more.
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