Stimulus Compromise Restricts Stabilization Funds to Education
While we're discussing the devastating effects of the Senate stimulus compromise on state budgets, it's worth pointing out that the centrist negotiators didn't just cut $40 billion in state aid.
The stimulus deal cut over the weekend also restricted states' use of stabilization money, requiring governors to use all of their share on education. Under the original Senate stimulus, states could use 61% of their aid from Washington on education and the remaining 39% on public safety or other pressing needs.
By no means am I suggesting that education isn't a worthy use for that cash. But if the centrists had left aid to the states intact, rather than cutting it in half, perhaps California could avoid furloughing government workers without pay. And maybe North Carolina could avoid shutting down mental hospitals and a major prison.
Josh
Matt
Eric
Brian
But Michael Steele tells me all of this is just someone wanting some bling-bling.
Can you say "tone deaf"?
Why yes. Yes we can.
February 9, 2009 3:23 PM | Reply | Permalink
Dems should absolutely run what that quote from Steele. both due to the idea behind it, the tone and the choice of words.
February 9, 2009 3:27 PM | Reply | Permalink
I'm sure you'll hear it repeated.
February 9, 2009 3:40 PM | Reply | Permalink
While driving home the "devastating effects" cut by the evil centrists, ow about highlighting the $800B that wasn't cut?
Looking at the Gallup poll numbers, folks are saying Obama is reaching out to Republicans - if the Senate played hardball and forced a filibuster rather than negotiating and this stimulus was put off for weeks due to the stalemate, I think both parties would have been blamed.
$800B+ is better than nothing.
February 9, 2009 3:25 PM | Reply | Permalink
Not necessarily true at all- not if it's not sufficient to stave off complete economic collapse. The we've incurred all that debt for nothing and we're WORSE off than with no bill at all. And forcing the states to continue running what amounts to a parallel, highly contractionary fiscal policy markedly increases the chance of such a dire outcome.
This is plain insanity which MUST be reversed in conference.
February 9, 2009 3:29 PM | Reply | Permalink
Of course, $800B is better than nothing! No one said it wasn't.
But if you're going to spend $800B, we should be trying to get the biggest bang for the buck. Those cuts just cost 600,000 jobs! And they aren't even Democratic cuts.
Democrats now own this bill but three Republicans have pulled out $40 billion in aid to the states --without any explanation as to why.
You're happy with that?
February 9, 2009 3:30 PM | Reply | Permalink
Again, an ineffective expenditure of 800 billion really COULD be worse than nothing. We're playing with fire here.
February 9, 2009 3:32 PM | Reply | Permalink
This is what people don't get: under arcane Senate rules I only recently learned of myself, the 60 vote threshold isn't just needing 60 votes to stop a filibuster. Apparently under a series of rules passed as part of what they call "the Budget Act," they actually have to have 60 votes to pass the law because it will increase the deficit.
Its not just about rolling out the cots and letting them try to talk it to death while the hostile phone calls and emails roll into their offices. It actually has to have 60 votes to pass.
February 9, 2009 3:57 PM | Reply | Permalink
NOooooooooo. We absolutely HAVE to have more money for states, and education, and mental health, and mass transit, and parks, and every single thing we can think of that we need. By the time we're finished this will wind up at $3 trillion. And even that won't be enough to stop the caterwauling.
Making difficult choices is sooo last century.
February 9, 2009 4:09 PM | Reply | Permalink
Oh, stop the bullshit! This morning, you claimed that there had been no spending cuts. When we showed you precisely what was cut--replaced by more tax cuts--you went silent.
Most people here conceded that there were some things in the original bill that did not belong. Money for aid to the states was not among them.
And please stop with the "it will be $3 trillion" straw man argument. The bill had education and funding to the states in it and it cost exactly what it costs now.
Precisely what tough choices did the repugs make? You mean the tough choice of giving more corporate tax breaks in lieu of money to keep local governments from laying off firefighters and police and teachers?
The price tag is still the same. It just doesn't buy nearly as much.
February 9, 2009 4:18 PM | Reply | Permalink
You didn't show any actual cuts except some lame Yahoo article that didn't add up. The first thing the Senate did was lard up the bill with additional spending until it was over $900B. Then they scaled it back to the original $800B. Only in budgetary la-la land is funding "slashed" when we spend $800 billion OVER AND ABOVE WHAT WE'RE ALREADY SPENDING, only because we're not spending even more.
February 9, 2009 4:26 PM | Reply | Permalink
Ummm. I guess you're calling Obama a liar? During his town hall today, Obama said that the Senate cut aid to the states and for education. Pelosi said it, too. So, I guess she's lying.
Within the last three hours, the president, the speaker, the governors of OH and NJ were all on TV decrying the spending cuts to education and aid to the states. I guess they are ALL misinformed. There were no spending cuts. Okie doke.
FYI, that was an AP article with a link on Yahoo. There are similar ones with the same info on CNN, MSNBC, NYT, WaPo, LAT, Chicago Tribune
But if you don't know the difference between an AP story and Yahoo story, I see why this "spending cut" discussion is waaaaaaaayyyyy over your head. Never mind.
February 9, 2009 4:43 PM | Reply | Permalink
They were cut in order to spend more money somewhere else. The total amount of spending is essentially the same as Obama's original proposal.
February 9, 2009 4:45 PM | Reply | Permalink
Total bullshit!
First, the bill never came from Obama; it came from the House. So your efforts to compare the Senate bill to Obama's non-existent bill don't wash.
The only apt comparisons are (a) between the final House and Senate versions or (b) the bill drafted by Dems in the senate with the one offered by the "centrists." The centrists have stripped out the aid to the states and money to revamp the schools to . .. ADD MORE TAX CUTS! They did NOT add more spending! Collins and Nelson were on TV bragging about the fact that they cut OVERALL SPENDING, their words.
This bill is 42% tax cuts v. 33% in the House bill. It also includes the AMT fix.
Same price tag, 9% more tax cuts, 600,000 fewer jobs created. Gotta love it!
February 9, 2009 4:56 PM | Reply | Permalink
"Same price tag, 9% more tax cuts, 600,000 fewer jobs created. Gotta love it!"
Let's see...9% of $800B is $72B. So for each $72B we spend we get 600,000 jobs? Then we can create 4 million jobs by spending $480B. So why is this bill $800B again?
Your case would be better if you didn't pull numbers out of thin air.
February 9, 2009 5:30 PM | Reply | Permalink
The $72 billion isn't just for making payroll!
While it puts people to work, it will also be used to winterize homes, repair roads and bridges, expand the grid, retrofit government buildings, make them more energy efficient and build and repair our schools. These things desperately need to be done. Folks will get jobs as a result. Win-Win.
Here's a partial list of what was cut:
$40 billion for stabilizing the states so they won't have to lay off cops and firefighters and teachers.
$16 billion for school construction.
$1.6 billion for head start.
If you can defend cutting those things to give more corporate tax breaks then I think you're in the wrong party--if you're really a Democrat.
But at least you stopped claiming there were no cuts. And FYI, that 600,000 jobs number came from Pelosi and Krugman. You might disagree with them but you can't say I pulled the number out of thin air.
February 9, 2009 5:45 PM | Reply | Permalink
The truth is, I don't much CARE whether there were spending cuts and from what baseline. Nothing like this has ever been tried before. The closest thing was 75 years ago in a completely different world. No one really knows how much stimulus we'll get from how much money. All the hue and cry that this whole thing is DOOMED because we have 42% in tax cuts instead of 33% seems pretty overwrought. It's far more important to get it passed quickly, and if a few percent more in tax cuts is the price of getting the necessary 60 votes, I DON'T CARE.
February 9, 2009 6:03 PM | Reply | Permalink
Another bogus argument. This exchange was *never* about whether you cared; it was about whether you were honest in your responses. You were not.
1. You claimed that there were no spending cuts.
2. You claimed that the tax cuts were only increased by 5% when they were increased by 9%.
3. You claimed that I posted a Yahoo article.
4. You claimed that the Repugs replaced critical aid to the states with other spending.
5. You claimed that people here were angry that the package wasn't bigger when we are upset over the composition, not the size. Taking $72 billion from cruicial aid to desperate families and and giving it to corporate is a big fucking deal!
I'll stop there. Next time, get the facts straight (or at least be honest about them) before you rush in and disparage people for "caterwalling."
February 9, 2009 6:20 PM | Reply | Permalink
Oh, since you know so much: where exactly did they "spend" the money they cut from education and aid to the states?
{Here's a hint: TAX CUTS!}
February 9, 2009 4:59 PM | Reply | Permalink
The increase to 900 billion was manufactured by Grassley when he dumped the AMT fix into the bill. The AMT fix is not stimulative because a) it goes to people who are already reasonable well off and secure and thus likely to save it our use it to pay down debt and, b) because it is passed every year regardless, and c) because it is passed every year, it is already priced into peoples' withholding--all the AMT fix does is keep them from owing when they do their taxes. It does not increase their take home pay and thus does not inject additional money into the economy.
Then, having inflated the price of the package with this bogus tactic, the "moderates" proceeded to ofset the "cost" of the AMT fix by cutting spending that is, in fact, truly stimulative and of the type that is essential to addressing the problem--state budget shortfalls, extension and expansion of unemployment benefits, food stamps, school construction projects and on and on and on.
In hindsight, letting Grassley dump the 70 billion AMT fix into this thing was the one true blunder the Obama team made. It got us zero additional Senate Republican votes. What it did do is bloat the number the MSM was bandying about in a way that created an appearance of "pork." That's what gave Nelson and his gang an excuse to start carving away at the critical parts of the bill for no other reason than to show everyone how big and powerful the SCSMs ("so-called Senate moderates") really are.
February 9, 2009 6:31 PM | Reply | Permalink
You may not have heard, but there are these people called "economists," and unlike Republican congressmen they aren't just pulling numbers out of their asses. The purpose of a stimulus is to compensate for demand that is lacking during an economic downturn to prevent a downward spiral where people losing their jobs or in fear of losing them spend less, leading businesses to cut back and lay off employees, and back around. The ballpark amounts necessary to make this work can be calculated, and the people who are demanding cuts on the basis of no economic theory other than "gosh, that's a big number" are making it fail and will cause more people to be out of work.
The only "caterwauling" we've had in this debate is from Republicans sniping at measures like funds for contraception and such which comprised less than one percent of the original bill. A certain amount has to be spent to make this work, and if you think it's a bad idea to spend it on things of lasting value like education, first responders, mass transit, and parks, then you're about as idiotic as most Republicans currently in federal office.
February 9, 2009 4:31 PM | Reply | Permalink
Wait...e-con-o-mists...You're going too fast. I'm having a hard time following you.
Save it. Most e-con-o-mists say that we need to spend twice as much. The difference of a few billion isn't going to make a damn bit of difference in the overall stimulative effects. It's far, far better to get an imperfect bill passed now than to screw around with it for another month wrangling over short strokes.
Most of the caterwauling is from people who want everything just on principle, just to show those evil Republicans who's boss.
Maybe you should consult with some of those economists to find out the macroeconomic effects of adding $800B to the deficit over two years. Where is this money going to come from? It's going to have to be borrowed, sucking a huge amount of money out of an already badly stressed credit market. There's a time and a place for deficit spending, and this is surely one of those times, but that doesn't mean the sky's the limit and there are no costs.
February 9, 2009 4:43 PM | Reply | Permalink
You're arguing with yourself!
We've got $800 billion for a stimulus. This is a debate about how that $800 billion is spent.
At first you claimed that there were no spending cuts; now you're floating some red herrings saying we "want to balloon the deficit by spending lots more." Totally bogus argument. Not spend more. Spend differently!
If we're going to drive up the deficit, it should be done in the most effective measure. Tax cuts ain't it! Bush cut taxes repeatedly and we're in the worst economic downturn since the Great Depression!
We should use that money to invest in the future of this country in a way that puts people back to work, instead of more tax cuts like Collins, et al are forcing us to take!
February 9, 2009 5:07 PM | Reply | Permalink
Still waiting for you to tell where Repugs spent the money they cut from education and aid to the states.
You made that pronouncement. Now back it up.
February 9, 2009 5:47 PM | Reply | Permalink
Dude, you and I agree 95% of the time, but government employment is supposed to increase when aggregate demand falls like this. Instead, its going the other way because state and local governments have severe practical or legal limits on their borrowing ability.
Getting a floor under the decline in state and local government employment is essential to pulling us, and the rest of the world, out of the tailspin the Masters of the Universe caused somewhere short of depression territory.
February 9, 2009 6:09 PM | Reply | Permalink
Jesus, that's the first I've heard of that restriction. Insane.
February 9, 2009 3:27 PM | Reply | Permalink
That makes me believe that more money for the states will be coming from some place else. Maybe that's how Obama will get more funds passed in a few months. But if this helps save teachers' jobs, then I'm for it.
February 9, 2009 3:31 PM | Reply | Permalink
So will state stabilization get put back in, education funds, or both? What are our chances here?
February 9, 2009 3:32 PM | Reply | Permalink
I too am all for saving teachers jobs, maybe even first among all others. But here's the insanity and stupidity of the restriction.
I am from California, the state with the largest budget problem, and most in need of a bailout. You can chalk up the political reasons for that, but we face a $42 Billion budget shortfall over the next 17 months.
But, California's education funding is protected by Proposition 98, passed by California voters about 2 decades ago. Funding for education cannot be reduced below certain thresholds except under certain circumstances (indeed, the current situation may yet meet those circumstances, but not necessarily, and it has never happened in 20 years).
So it's great to protect education funding. But if the state has already done that--as the biggest state and state most in need of the funding has--then the restriction positively hurts, since the Senate version would not allow California to spend money on areas where state law requires the cuts to come from.
Genius.
February 9, 2009 3:45 PM | Reply | Permalink
Ah, yes. As day follows night, cuts to mental health care follow a budget shortfall in the North Carolina General Assembly. They're impoverished, helpess and have no political power whatsoever. How can you not cut funds for their treatment when you know there will be no consequences? And hey, at least we don't forcibly sterilize them anymore. (Not since the 70s, anyway.)
February 9, 2009 4:06 PM | Reply | Permalink
The next time any of these so-called "centrists" open their yaps to talk about how the Federal government shouldn't dictate to the states, they should be slapped.
February 9, 2009 4:19 PM | Reply | Permalink
California is doing the right thing, IMHO, as difficult as it may be. Folks are keeping a paycheck, minus a bit. I know it can hurt; but losing a full paycheck would hurt even more.
It's a shame that North Carolina didn't take this route.
February 9, 2009 4:39 PM | Reply | Permalink
Naaah. Who cares about crazy people, anyway? Let 'em get jobs as figures of fun and object of ridicule for bands of small children. Or just lock 'em away in attics or wander the streets unmedicated until a good below freezing cold snap comes along to thin the herd. Why should the weak, the helpless and the defenseless be a government responsibility?
February 9, 2009 6:38 PM | Reply | Permalink