The Tea Party “patriots” and political apostles of Pope Grover are really shooting themselves in the foot on this one, and they’re just too dumb to realize it. There just isn’t much discretionary spending left to cut — which means any money for this debt ceiling deal will come from funds that should be going to state budgets, and the pain will be amplified on the local level. It will be interesting to watch all these Republican governors and state legislators try to explain away the eventual steep rise in state and local taxes, trying desperately to distance themselves from the consequences of their “cut cut cut” rhetoric. Wait until all those Medicare-loving tea lovers find out their spouses who need nursing home care will no longer be eligible — because the Medicaid funds aren’t there anymore.
Congratulations, all of you – here comes your instant karma!
Among the biggest items on the chopping block in Congress are education and Medicaid spending — federal dollars that make up the largest parts of most states’ budgets. Nearly every state government has already set its budget for the next year — some for the next two years — under the assumption that federal spending would remain more or less consistent. If such money is abruptly pulled, states won’t suddenly be able to change their spending obligations or raise taxes.
“They’re going to have to eat that in some way, and many will pass [the cuts] onto local governments,” said Frank Shaforth, director of the Center for State and Local Government Leadership at George Mason University.
Amid the recession and dropping revenues, there’s already been an uptick of bankruptcy filings by cities, towns and rural districts across the country over the past two months and there could be more if Washington follows through on its promise to slash spending as soon as possible.
“The cities and counties that already in bad shape — they’re the first ones to go,” White said.
Even if state governments hold special sessions to cut spending further, their cuts will still “filter through to the local government,” he added. “Public-sector workers get laid off. There’s higher employment and lower spending.”
Local governments will try to raise property taxes to raise revenue, which could be yet another drag on a housing market that’s yet to recover. Those who fail to meet their fiscal obligations could see their credit downgraded, making it even harder for them to borrow money to build basic local infrastructure, while both the president and the GOP have threatened to pull funds for state infrastructure. What was once an ideological abstraction — “austerity” — will have very real effects on everyday life for average Americans.
Some state and local officials are already bracing for the worst. As the Pew Center on the States notes, Virginia’s Gov. Bob McDonnell (R) has proposed borrowing money fromthe state treasury to cover federal Medicaid funds, and the California state treasurer is considering a Wall Street loan to help the state make ends meet in August.
With state and local voices largely absent from the Washington debate, officials and advocates are struggling to make their concerns heard — and remind Congress that slashing federal spending could have a massive, unanticipated ripple effect on every level of government.
Meeting with Sen. Mark Warner (R-Va.) on Tuesday, Shaforth told the ex-governor, “I want you to put your governor hat back on…This is the United States — this is not just the federal government.”