Gov. Rendell, a Democrat, and Gov. Christie, a Republican, don’t agree on much. But both executives believe they’ll be forced to impose deeper budget cuts that harm workers and children if Congress doesn’t extend aid to states from last year’s economic recovery act. In Pennsylvania, Rendell is counting on an additional $850 million in federal Medicaid assistance to help balance the budget. In New Jersey, Christie is banking on an extra $570 million from Washington.
In all, 30 states are expecting more Medicaid money to help cover budget deficits. The stimulus money is due to expire Dec. 31; the governors want a six-month extension through June 2011. They should get it. The House voted in late May to remove $24 billion of this aid from its bill. The Senate has amended the legislation to restore the money, but final passage is not yet assured. A key vote is expected this week.
Most states don’t have a “plan B” if they don’t receive the money, meaning they’ll be forced to impose layoffs and more cuts in services. Rendell has warned that without the funding, Pennsylvania’s cuts would include eliminating some aid to 90 percent of all hospitals, cutting child-welfare services 25 percent, and reducing rape-crisis programs by 50 percent. Layoffs would be likely. Without the subsidies, states will likely cut education programs, and mental-health services, too.
House lawmakers rejected the Medicaid assistance last month out of concern for increasing the federal deficit, already at record levels. The deficit is a pressing concern, and Congress does need to address it. But deeper cutbacks by states at a time of high unemployment are likely to produce more short-term pain and more lost jobs due to lower demand for services. That will only postpone a recovery.
Assuming they do receive this extra aid from Washington, state officials should consider it a last chance to wean them from the stimulus teat. They must stop writing budgets that include emergency funds that the federal government will eventually end. Pulling the country out of a deep recession and deep deficits is a balancing act that can’t leave out its most vulnerable citizens. This is not the time for Congress to abandon the many states that are still struggling.