Should Congress Bail Out States?

Stimulus bailout needed at the state and local levels. State governments are hard pressed to reduce deficit losses facing budget shortfalls in the $$ billions. A large number of states will be forced to slash budgets in half or raise taxes to meet financial responsibility like the auto and banking industries, states need bailout support from Congress. Should Congress bailout states?

Congress has to lend support much like the 2008 and 2009 stimulus package proposed by President Bush and Barack Obama that helped the states avoid budget cuts. Even now most states will be forced to enact cuts this year alone to restrain from overspending.

Spending money to the states to reduce their loss would make it more difficult for Congress to meet its goal of trying to get the federal deficit under control. But the rough estimate is that the various states face budget shortfalls exceeding billions. Without a bailout from Washington, a large number of states will be forced to endure unprecedented levels of spending reductions or increase taxes.

A state bailout package in many state capitals will make it very difficult to raise taxes on residence. This is a very good sign provided that states budgets are not operating in the red overextending those budgetary programs.

The last stimulus package passage helped states avoid budget cuts. But states were forced to enact cuts on state mandated new programs but allowed to continue retaining employees whose costs added to the states budget crisis. More federal bailout money is now needed for government workers – including teachers, law enforcement agencies and social workers. Because of states “red ink” those jobs could be lost. Without a federal stimulus bailout, states would find themselves in a deficit hole forced to raise taxes.

Illinois is the biggest state across the nation with the worst financial budgetary problems. The state has a $17 billion budget deficit that has stopped the flow of cash to state run universities and schools, transportation systems and social service agencies is forcing state Legislatures to make choices to cut half of the states budget recently. According to the Chicago Tribune, “Illinois’ financial crisis was not created by the great recession. It is a self-made crisis fed by a lack of responsibility.”

Illinois and other states budget problems are shorter in dollars compared to the federal governments. The president and congress will be forced to provide more stimulus bailouts to states that will add more to the federal deficit. The Republicans control of the House of Representatives will block any efforts for more federal spending. Congressional members will not let states fall flat on its face. Most of the bailout needs are in Democratic controlled states. The last banking bailout in 2008 has not provided any stimulus to the American consumer, but any help from the federal levels will be a big surprise.

About the Author

Michael Coker

Conservative Political Writer, Contributor and Blogger, Founder secondopinionpundits – Political Web Magazine – Politically Opinion Based Facts