House approves jobs bill: Do states deserve $26 billion more stimulus?
The House of Representatives cut short its August recess to return to Washington and pass a state jobs bill Tuesday. Supporters say the bill is much-needed additional stimulus; detractors argue that it has too little money to really make a dent in states' budget problems.
It's the latest package of federal stimulus money, and it has sparked the usual partisan debate: Is more aid to state governments really needed, and will it truly add jobs to the US economy?
Backers of the $26 billion measure, which passed the House of Representatives by a vote of 247 to 161 on a largely party-line vote Tuesday, say that states deserve extra financial support amid a historic cash crunch this year. And they say it means jobs, because it will reduce the number of state-employee layoffs.
President Obama urged the House to pass the bill in a Rose Garden speech before the vote Tuesday. The bill has already passed the Senate.
But critics say it's yet another example of wasteful spending, misleadingly called "stimulus," that shouldn't be happening. Some tough budget shortfalls may be ahead, but schools and state governments can manage without that $26 billion, they argue.
Here's a look at the pro and con arguments – part of a larger debate about federal stimulus:
Yes, states should get this help.
The housing bust and financial crisis on Wall Street weren't created by state governments. Now, through no fault of their own, states have had to confront a multiyear downdraft in tax revenues. And, with requirements to balance their budgets, they can't close budget gaps by borrowing.
The new state aid will include $16 billion in Medicaid funds, a key area where states have seen costs rise. During the recession, more Americans have lost private-sector health insurance and are turning to Medicaid for health care coverage.
For the states, this is not a Democrats-versus-Republicans issue. Some 47 governors representing both parties signed a letter urging an extension of Medicaid assistance (called the enhanced FMAP program) that was included in President Obama's 2009 American Recovery and Reinvestment Act.
"Passing a two-quarter extension of FMAP as soon as possible is the best way to help states bridge the gap between their worst fiscal year and the beginning of recovery," the National Governors Association wrote in a June letter to Senate leaders. Without the Medicaid money, states say they would have to find other ways to fund their portion of the Medicaid program, and thus would need to cut spending on other services that are popular with voters.
The other part of the bill is $10 billion in aid designed to help states avoid teacher layoffs. In Colorado and elsewhere, school districts "are facing the deepest budget cuts in memory," with some even shifting to four-day weeks, said Jared Polis (D) of Colorado on the House floor Tuesday.
A basic premise for supporters is that the bill accomplishes two good things: reducing the size of cutbacks in state services, and stimulating the economy. Proponents say without the Recovery Act, and follow-on measures such as this one, there would be less cash flowing through the economy, and America's unemployment rate would be even worse.
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