Federalism

GOP Govs Prepared to Punch Federal Gift Horse in the Mouth?

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The Christian Science Monitor reports on some Republican governors' discontent and fear over the longterm results of taking federal stimulus money:

Gov. Butch Otter is one of at least half a dozen Republican state executives who have said they may reject some, even all, of the money their states would get under a stimulus package expected to enlarge the government's slice of gross domestic product and slow, if not reverse, the economic downturn….Alaska Gov. Sarah Palin, Mississippi Gov. Haley Barbour, Louisiana Gov. Bobby Jindal, South Carolina Gov. Mark Sanford, and Texas Gov. Rick Perry have joined Otter's revolt.

Indiana Gov. Mitch Daniels has also raised concerns about future state obligations especially for education, welfare, and healthcare spending, which make up the bulk of the $787 billion package.

"Some school systems will see a gusher of money the like of which no one has seen before," said Governor Daniels at a press conference last week. "When federal funds stop coming, there will not be any way to replace all of that."………

In a study released late last week, the Rockefeller Institute found that states are wise to take the money, but should plan judiciously. By the time the money runs out in 2011-12, conservative estimates show states could face budget gaps equaling 6 percent of general revenues, or about $100 billion nationwide. Spending cuts or tax hikes would be inevitable, the report concluded.

"This stimulus gives states some time, but it doesn't make the problem go away," says Donald Boyd, who wrote the report. "There is a risk of losing discipline, [but] in the end, I'd be very surprised to see a state reject the money. It's fine to take a stand, but retreat may look pretty good."

While I have strong doubts that there will be much follow-through on these misgivings, what these governor's fear is true of stimulus politics as a whole: trying every expedient to seem to be solving a short-term problem with very little thought to whether it's sustainable or just slightly postponing a terrible problem for a few years, with no thought for permanent solutions. And such permanent solutions will never involve the constant outflow of federal money that the government doesn't even have.

[Link via Rational Review.]