Saturday, July 3, 2010

How State Government Is Laying Landmines In The Way To Recovery

You may not like him but Dick Morris wrote this great article on how s tate governments are part of the reason the economic recovery is illusive. They are laying landmines in the way to recovery.

Until now, the problems in these states have been papered over by federal aid. Essentially, Washington has relieved these states (and the local governments they fund) of their constitutional obligations to balance their budgets by giving them welfare checks in the nick of time. Obama now seeks to pass $50 billion in additional welfare to the states.

But since these federal funds are not necessarily recurring — and the jobs and obligations they fund are — they simply enlarge each year’s deficit hole and enable the states to go more deeply into the red.

As these deficits mount — particularly if a newly elected Republican House and/or Senate refuse to fund them — bondholders will get more and more nervous. Eventually, they will realize that the less solvent states are bankrupt and will refuse to buy their debt. Eyes in Sacramento, Lansing and Albany will turn helplessly to Washington to guarantee their debt, just as Athens turns to Berlin.

On the left will stand Obama, the unions and the Democrats demanding bailouts for the states and, truly, an end to our federal system of government. Once Washington guarantees state debt and spending, there will be no more state governance, only national rule.

On the right will stand a Republican Congress refusing to do so unless the states declare bankruptcy and cleanse themselves of the union agreements that got them into trouble in the first place. The GOP will point out that state funding is leaking as surely as the Deepwater Horizon oil well and polluting our nation’s balance sheet as badly in the process.

The current General Fund budget passed by Pennsylvania legislators relies on $850 million in Medical Assistance aid. To date the state has relied on federal stimulus money to mask the gap in income vs. expenses for Pennsylvania. Legislators are continuing to forestall the pain of the pension crisis caused by their majority back in 2001. Senate Republican Dominic Pileggi warned of a $4 billion to $5 billion deficit.

What was the Democratic response? Increase the legislative budget while making libraries and parks take the hit. Here's a no brainer. Libraries and parks are free for the most part. In these tough economic times lets take away some free enjoyment for our constituents but make them pay more in taxes while we tell them how good things are and while we make sure our legislative jobs are protected.

Forget that children can swim, play in the sand, throw a baseball with family, throw a frisbee with the dog, walk among the birds and animals in the forest, stare for endless hours at a stream hoping to see a fish makes its way through the crystal clear water, take a fishing rod to catch a fish which gives the child a sense of accomplishment, smell the fresh pine needles, see birds perched in trees and bushes watching humans as much as humans watch them. Forget that reading is the most important tool for learning.

Forget that Todd Eachus and Paul Kanjorski accuse Lou Barletta of polluting his community while DEP's budget was slashed almost 30% last year and another 9% this year while per diems were saved.

Todd Eachus has told those who went to see him that their section of the economy must "take a hit". Mr. Eachus,when is it your turn? Did you lack the instestinal fortitude to do the right thing because it is an election year? Is it part of your incumbent protection plan? I liken incumbent protection plans as the Mafia for politicians who don't have confidence in the decisions they made while in office.

You stand on street corners as a campaign tool to wave to people. Why don't you stand at the opening to the parks and libraries and try the same thing? Oh..forgot they aren't important enough.

Mr. Kanjorski, you are correct that Cornerstone Technologies has been hashed out in previous elections. What hasn't been hashed out is how the $10 million spent on that project didn't result in long term jobs, just like the stimulus money. Mr. Eachus calls them WAMS and Kanjorski calls them earmarks. Either way they are really pork for the political appetite. Enjoy your ribs this holiday weekend while the rest of us ponder on the lack of confidence of recovery.

Maybe we should start our own campaign against landmines. It's known as the opposite of incumbent protection. We call it "Incumbent No Relection".

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