Brief Notes on the Geithner Financial Rescue Plan
Why Do I Have to Deal with People Like Donald Luskin?

Fifty Little Hoovers

That's what Paul Krugman calls the state governors right now, all under pressure to deal with collapsing tax revenue.

Steve Benen:

The Washington Monthly: IT AIN'T FEARMONGERING IF IT'S TRUE.... Just today, the LA Times has a good report on the unprecedented pressure on state budgets right now -- pressure that will not be alleviated by the federal recovery plan because Sens. Collins & Co. believe state aid isn't stimulative enough. While state shortfalls will lead to painful cuts in practically every state, Nevada is poised to get hit much harder than most.

The Times report noted, for example, that Nevada is "facing the most serious shortfall," and lawmakers will have to cut a striking 38% from its state budget. The impact across the state will be both drastic and unavoidable, most notably in the state's public schools, which will soon face a 15% cut.

It wasn't surprising, then, that Rep. Barney Frank (D-Mass.) criticized Senate "centrists" for cutting $40 billion in state aid from the stimulus package, noting that the aid, which appeared in the House version, was intended to stop states from "laying off cops and firefighters, money to help keep teachers going." Republican Sen. John Ensign of Nevada rejected Frank's comments, labeling the remarks "fearmongering." Indeed, Ensign seemed encouraged by the fact that state budgets, including his own, would have to be slashed, calling the budgets "bloated." He said, "What we should be doing is cutting back."

Got that? As the recession worsens, and government spending is needed to prevent more Americans from losing their jobs, a leading Republican senator whose own state is about to get pummeled, believes it's a good idea to "cut back."

I can think of a variety of ways to respond to this nonsense, but I think Matt Yglesias summed things up nicely:

The idea that it would be good for states to cut back in the midst of the recession is stupid. The idea that the recession won't, absent federal aid, lead to layoffs of state employees such as teachers and firefighters is also stupid. But the idea that it's simultaneously true that the reason we should eschew aid is that states need to cut back and also true that it's fearmongering to warn of layoffs is doubleplus stupid. What does Ensign think cutbacks consist of? States will be reducing vital services. The cutbacks will have the immediate impact of reducing the incomes of laid-off families and beneficiaries of state programs. That will have an additional impact on businesses where the newly laid-off teachers and cops used to work.

And the reduced level of service will have its own bad economic impacts. Cutting back public safety budgets will mean fewer cops on the beat. That means more crime which will further reduce economic activity. State cutbacks to child care subsidies will make it harder for people who lose jobs to find and accept new ones. The cutbacks to mass transit services that are happening across the country will introduce additional rigidity into the labor market and reduce patronage of businesses that people are accustomed to reaching via transit. And in the most severe cases, cutbacks in assistant to the severely impoverished will have a decades-long impact on the well-being of their children.

Sen. John Ensign is entirely comfortable with all of these developments -- those dreaded state budgets are "bloated," after all -- but doesn't want anyone to acknowledge this publicly. Pointing to reality is "fearmongering."

It's not enough for congressional Republicans to stand in the way of sound economic policy during a crisis; they also want to discourage everyone from talking about it.

Comments