Is it time to bail out the states? Peter Brown says yes:
Amid all the talk in Washington, D.C., about cutting the federal budget deficit, there is little public discussion of what might be among the most contentious issues that will face the new Congress in January – whether to bail out the states.
Obviously, sending money to the states to reduce their red ink would make it more difficult for Congress to meet its goal of trying to get the federal deficit under control. But the rough estimate is that the various states face budget shortfalls exceeding $100 billion. Without a bailout from Washington, a large number of states will be forced to endure unprecedented levels of spending reductions or tax increases.
If you remember, the collapse of state finances in 2009 contributed to the stimulus' short reach; in the end, the $787 billion package was just large enough to cover the output gap created by slashed state and local budgets. The recovery is slowly moving along, but in the absence of new action from Washington, it's likely that austerity measures in the states will slow growth to a crawl. With a functioning political system, we could at least discuss the possibility of a new bailout to the states, but as it stands, one of the major parties is prepared to plunge the United States into economic crisis -- again -- for the sake of its petulant, hyper-ideological agenda.
-- Jamelle Bouie
