One more time: Don’t stiff the states!

A recent Associated Press article about the forthcoming Obama stimulus plan is somewhat encouraging on the state-aid front.  I’ve been arguing vociferously that any stimulus package that doesn’t include massive aid to states and localities is a sucky stimulus package.   Basic services like schools depend on state and local tax revenues, which have taken a beating during the current slump.  The article’s emphasis is mostly on infrastructure projects, but here’s a glimmer of hope:

“In addition, states would get up to $200 billion over two years for Medicaid health coverage for the poor and to narrow state budget gaps, which are forcing layoffs and cuts in services.”

Up to $100 billion per year …  Is that good?  It looks like a lot, but I’ve yet to see a projection of the combined deficits of the fifty states plus D.C.

Another glimmer of hope, on the schools front:

“Obama’s vision of infrastructure goes beyond repairing or building roads and bridges. It includes modernizing schools, boosting high-speed communications networks and installing technology at hospitals and doctors’ offices to electronically access medical records.”

So far, so good.  But still, almost all the talk is about rebuilding our infrastructure.   We see it again in this Dec. 28 op-ed by Larry Summers, which just barely hints that some of the stimulus money might be directed at schools and basic health-care services (and does not mention general state aid at all).  Not that there’s anything wrong with infrastructure, but it almost seems like Obama advisers feel like it’s politically perilous to talk about aiding the states, as if the average American is going to blame the states for their woes (a la the Big Three automakers and the unpopularity of the bailout).  To be sure, there are a lot of people out there who have that “I say,  let ’em crash” mentality, but that’s all the more reason to make the case for aid now.

UPDATE, Dec. 30:  I posted this on Sunday (and had made a similar point in “Fiscal Policy in the Oughts” a week earlier), and voila, Paul Krugman’s NYT column on Monday, titled “Fifty Herbert Hoovers,” says the same thing!   Thanks for reading, Paul.  I kid, I kid — no such delusions of grandeur here.  As comedian Owen Benjamin put it when asked about comics stealing each other’s material, there’s only so many premises out there.

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