Commentary

Democratic governors call for $1 trillion stimulus

Four Democratic governors held a news conference to stump for a $1 trillion dollar “stimulus” package. Really, this is a state bailout, since virtually all the money they want is going to pay for keeping existing programs (and planned increases) in place.

The package would help states compensate for cuts to education spending that could cause long-term economic decline, as well as bolster infrastructure projects and benefits programs for the poor, the governors from New York, New Jersey, Massachusetts, Ohio and Wisconsin said in a news conference.

They argue that if they cut budgets, they will have to cut jobs, and that will make the nation’s economic problems worse.

The governors recommended that the stimulus plan include $350 billion for infrastructure, including transportation, wastewater and broadband projects; $250 billion for anti-poverty programs such as Medicaid, unemployment insurance, food stamps and child care; $250 billion in flexible education spending to maintain funding for programs from pre-kindergarten to higher education; and middle-class tax cuts. The money, disbursed over two years, would offset cuts needed to balance state budgets and would serve as a “bridge” until 2011, by which time the governors hope the economy will have recovered, said Massachusetts Gov. Deval L. Patrick.

Not surprisingly, the governors represent some of the nation’s most profligate state governments. According to the Tax Foundation, the state and local tax burden for New Jersey ranked 1st in the nation in 2008, followed by New York (2nd), Ohio (7th), Wisconsin (9th), and Massachusetts (23rd). Private companies use economic downturns to become leaner and more competitive. They experiment with ways to become more productive, and re-evaluate what products and services they should be providing to their customers. Notably, these states are not known for being on the cutting edge in terms of strategic management, using competitive bidding to control costs, reining in collective bargaining laws that insulate employees from poor performance, or adopting other cost saving measures. Corzine (NJ) and Paterson (NY) have made a few overtures toward public private partnerships, and Strickland has kept the rate of increase as historically modest levels (for Ohio), but these efforts don’t seriously grapple with really re-prioritizing programs, strategy, and goals.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.