How The Senate Stimulus Compromise Burns Cash-Strapped States

[babylonsister]

Senate Stimulus Compromise Deals a Blow to Cash-Strapped States
By Elana Schor - February 9, 2009, 1:37PM

snip//

Arizona, where Sen. John McCain (R) is touting his dogged opposition to the stimulus, is facing a $1.6 billion budget shortfall that could double in size by next year -- a gap representing nearly one-third of the state's general fund, according to the CBPP.

The state already has eliminated temporary health benefits for the disabled, hiked public university tuition by 9.5%, and instituted a hiring freeze. Meanwhile, McCain and Sen. Jon Kyl (R-AZ) are almost certain to vote against even the compromise cuts to state stabilization aid, with McCain thundering that the stimulus will "mortgage the future of our children fiscally profligate spending."

Let's not even mention Nevada, where Sen. John Ensign (R) is opposing state stabilization aid despite a budget deficit that swallows 38% of the general fund. A provision in the stimulus says that states may lose out on money if they do not increase education spending to 2006 levels -- a requirement that Nevada is finding difficult to meet. The state already has delayed a promised kindergarten expansion, cut money for gifted and disabled education, and sliced public university aid, according to the CBPP's analysis.

Which brings us to Maine, the home of lead centrist negotiator Sen. Susan Collins (R). The state budget chief says Maine is hoping for as much as $1 billion in federal aid to help close a deficit that is already forcing layoffs and fee increases. So why did Collins work so hard to trim the estimated $250 million in state stabilization aid that would have gone to her own constituents? If she knows, she's not telling.

And these Republicans are just the tip of the iceberg.

more...

http://tpmdc.talkingpointsmemo.com/2009/02/senate-stimulus-compromise-deals-a-blow-to-cash-strapped-states.php

[The Wielding Truth]

1. Who is telling them what to say? They are selling out their own states.

[Hannah Bell]

2. They intend to bankrupt states (point where constituents interface with gov,

many benefits distributed, state-funded jobs in education, state utilities, etc.)

It's already happening.

[terisan]

3. We have to borrow the stimulus money & no one wants to buy our bonds at our current interest rate

Interest rates are rising on our long term debt and may start to rise rapidly, inflationary spiral may commence and life may get very bad. (We become serfs to IMF)

Larry Summers has acknowledged possibility but says worry about that later.

Third world countries are getting angry-their finance people say that they will be crowded out of international credit market by US Stimulus--guess we are screwing them over again.

No one knows for sure whether these massive borrowings will work. Even Biden says maybe it won't and estimates 30% chance of failure---(that makes me think it is just 50-50 or chance.