Posted on 02/24/2003 5:15:54 PM PST by GeneD
WASHINGTON, Feb. 24 — President Bush tried to inject some optimism today into the collective gloom of the country's financially strapped governors. But he offered virtually no hope of any new injections of federal money.
"We face common challenges," Mr. Bush said. "I look forward to working with you all to meet those challenges."
Mr. Bush told the state leaders that his economic-stimulus plan would rejuvenate the economy, putting more money into the taxpayers' pockets and therefore more tax money into state coffers, which are being strained to the limits.
"So this is the plan that I'm asking Congress to pass, and I believe we're going to get a lot of it passed," Mr. Bush told the executives. "And I believe it's going to encourage growth. As a matter of fact, the — you know, these economists predicted in the blue-chip forecast that the economy would grow at 3.3 percent if Congress responded to a stimulative package — if it responded."
Mr. Bush addressed a gathering of the National Governors Association at the White House, and the governors applauded courteously several times. But based on private remarks by the president, as well as his public comments, Republicans and Democrats alike came away with the feeling they will get no additional federal money.
(More information on the governors' winter meeting can be read on the association's web site: www.nga.org.)
The president, himself a former Texas governor, sought to convey an impression that he understands the problems of the states. "You know, we've got an issue with our own budget," Mr. Bush said. "You've got issues with your budgets. We can talk about that."
Mr. Bush reminded the chief executives that he has called for $400 billion in grants to states, a 9 percent increase, in his budget for fiscal 2004. "We can discuss whether that, in your mind, is enough or not," Mr. Bush said. "I suspect I may know the answer."
The president asserted that his plan to eliminate taxes on corporate dividends would help senior citizens, pump a quick $20 billion into the economy and, by boosting business, encourage the creation of jobs.
But that part of Mr. Bush's talk may not have been pleasant listening for the governors, since state and local officials have expressed worries that elimination of the tax would cost their governments millions in lost revenue.
The president alluded to his plans to retool the Medicare and Medicaid systems, giving the states more power and flexibility to determine eligibility in Medicaid grants. But fierce debates are already underway on what kind of changes should be effected.
"Medicare is an old system," Mr. Bush said. "It's hidebound with rules, and it really doesn't address the needs of many seniors because of its age."
"Medicine's changed," he said a moment later. "Medicare hasn't, and we got to deal with it, and we will deal with it. And Medicaid is also an issue that we will discuss with you and work with you."
Many governors are experiencing their worst fiscal problems since World War II. The association's chairman, Gov. Paul E. Patton of Kentucky, a Democrat, said at the start of the weekend meeting that governors anticipate a shortfall of $82 billion in their next fiscal year.
The vice chairman, Gov. Dirk Kempthorne of Idaho, a Republican, said earlier that the White House's willingness to be flexible on Medicaid was encouraging. He said, too, that if states find ways to save money by cutting their end of Medicaid spending, they should still be able to keep the federal money that would otherwise have come into their treasuries.
A big problem for the states is that many are barred by their own constitutions from operating at a deficit. So if their revenues decline, they must cut back services.
Regardless of their parties, the governors have reason to hope that Mr. Bush's economic-stimulus proposals — or whatever elements make it through Congress — do what Mr. Bush says they will do.
Meanwhile, the governors can remember how quickly things can change.
"The states are overflowing with money and spending a lot of money," Stephen Moore, an economist at the conservative Cato Institute in Washington, once said. "States are continuing to cut taxes, too. But the money is coming in so fast they haven't kept pace."
The economist made that comment in the spring of 2000, before the extent of the dot-com collapse was clear and the economy began its free fall.
Last I heard, there *is* no more federal money. The feds would have to borrow it. If the states want it, let them borrow it. Of course some states, sensibly, have balanced budget or no debt provisions in their state constitutions. So then if their politicians want to spend more money, to buy more votes, they'll have to raise taxes, which will probably lose them more votes than they can buy, at least in the short term, and very few politicians thinks much beyond the next election.
The problem is highly structured beaurcratic organizations "cut the fat" by cutting out low level workers, but keep the high $ executives and managers, making the "overhead" rate even higher, and thus resulting in cuts to actual programs out of proportion to the amount of the cuts.
Give 'em all they can eat.
The only conclusion possible is that the NYT believes Americans are undertaxed. And also that raising taxes will automatically generate more revenue, which is not necessarily the case, especially if the attempt is made to "soak the rich".
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