Fiscal Suicide: IT’S A TRAP!

A gang of Republican Governors have created quite a brou-ha-ha over their decision not to take all of the “stimulus” money given to their state. I believe they are letting their “ideology” get in their way of what’s best for the American people, especially since you and I both know only liberals take principled stances on things.

Granted a person’s “ideology” tends to be guided by what they think is in the best interest of the American people, but whatever.

Here’s the thing though, it would appear that these governors might have a method to their madness after all. There’s concern that the Pelosi-Obama massive spending bill might set a long term budget trap for the states who accept the money. Here’s the Wall Street Journal with more…

Governors are protesting loudest over the $7 billion for unemployment insurance (UI) expansions. Under the law, states will increase UI benefits by $25 a week. The law also encourages states to cover part-time workers for the first time. The UI program is partly paid for by state payroll taxes imposed on employers of between 0.5% and 1% of each worker’s pay. Mr. Barbour says that in Mississippi “we will absolutely have to raise our payroll tax on employers to keep benefits running after the federal dollars run out. This will cost our state jobs, so we’d rather not have these dollars in the first place.”

These five Governors deserve credit for blowing the whistle on the federal trap that Washington has set for their budgets. They stand in contrast to most of the other Governors, who are praising the stimulus as a way to paper over their fiscal holes through 2010. But money from Congress is never as free as it looks, as the banks can attest. Don’t be surprised if two years from now states are still facing mountainous deficits. They will have their Uncle Sam to thank.

It’s a shame we were in a rush to pass the Pelosi-Obama Act so that it could sit on the President’s desk for four days while the President was on a weekend getaway with Mrs. Obama. Had there been time for people to read the bill before they passed it, it would have been a valuable debate to see what Congress expected the states to do when the money runs out.

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