Op-Ed Columnist – Paul Krugman – Fifty Herbert Hoovers – NYTimes.com.
Krugman is concerned that state level spending cuts will counteract federal level stimulus.
But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.
These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.
Governors are panicked and don’t have the ability to engage in deficit spending while capital markets are dried up. They can’t print money like the feds can.
What can be done? Ted Strickland, the governor of Ohio, is pushing for federal aid to the states on three fronts: help for the neediest, in the form of funding for food stamps and Medicaid; federal funding of state- and local-level infrastructure projects; and federal aid to education. That sounds right — and if the numbers Mr. Strickland proposes are huge, so is the crisis.
In the short time it would be wise for the incoming Obama administration to send targeted funds to the states and at the very, very least prevent cutbacks to the very programs that are most needed right now. A better idea would be to help fund and expansion of local infrastructure projects and mend the gapping holes in the social safety net. Health care reform plays a key role here. Medicaid is under funded. Medicare has some long term funding issues that will only be resolved once we begin adressing systemic health care reform.
