EDITORIALS
Federal aid will help
Sending stimulus money to states should ease impacts on taxes
Updated: 01/03/09 6:50 AM
It truly would do little good if the federal government, in hopes of stimulating the economy, were to pour money out with one bucket just as the states were gathering it up in 50 others.
New York, like its 49 sisters, does not have the luxury the federal government effectively has, of printing money in tight times. As did President George W. Bush before him, President-elect Barack Obama is preparing a package of jump-starts for the faltering economy, steps that will involve significant amounts of deficit spending.
But, because of that same faltering economy, most of the states are looking around for expenditures to cut or taxes to increase in their annual — and, this year, exceedingly difficult — task of balancing their state budgets. That can only mean an economically stifling combination of tax hikes, which take money out of the economy, and spending cuts, which do the same.
Thus it is good news to hear, from New York’s Sen. Charles E. Schumer among others, that Obama’s stimulus plans will include a significant amount of money aimed at the states. That will help those states, New York especially, keep up services and programs, particularly for the poor, with less of a need to either cut spending in other areas, raise taxes, or both.
Word is that the Obama plan would amount to some $800 billion. Of that, as much as $100 billion would go to increase the federal government’s share of the cost of the Medicaid program. That’s a federal-state operation that pays for health care for the lowest-income families and amounts to huge chunks of every state’s budget.
New York’s share of that could be $5 billion a year, a big step toward closing the $15.4 billion budget deficit the state faces in the next two years.
Health care in America clearly costs too much, and any long-term fix of both the health care sector and the economy overall will require something to limit those costs. But in the short term, simply refusing to pay for needed health care services would serve no purpose. In addition to the human suffering it would cause, simply chopping off access to medical care would result in missed work, missed school, lost jobs and other attacks on the fiscal health of households, communities, states and the nation.
Increasing the federal contribution to Medicaid will free states to meet other needs, keep services flowing and blunt the need for other tax hikes. So would the other components being contemplated for federal assistance, including highways, bridges, mass transit and other infrastructure improvements that not only will create jobs and cash flow, but also improve the ground on which private-sector growth will be built.
The plans, as now envisioned, will help New York’s budget. But they won’t fix everything.
New York Gov. David A. Paterson has proposed a budget that would plug what stands to remain billions in red ink, with cuts in education and health care spending, 500 or so layoffs and a long list of nickel-and-dime tax increases. Some of that may be set aside if the federal money train arrives in time. But a hard look at structural reasons why government in New York costs too much remains a necessity.
Even Washington can keep the printing presses going only for so long.
