Gregoire: Stimulus will not stop budget cuts

By Evan Rohar

The federal stimulus package (which the House passed and the Senate is now considering and adding to - about $900 billion in total spending so far) won't produce the results many in Washington State and across the country have hoped for - alleviating the draconian cuts to the State budgets. The best we can hope for is a softening of the blow, tantamount to a pillow strapped to the head of a person about to withstand a an assailant with a sledgehammer. From the PI:

Washington's share of a federal economic stimulus package - estimated at perhaps $4 billion - will have plenty of strings attached, and won't be the economic cure-all that some people are hoping for, Gov. Chris Gregoire said Tuesday.

"I think the expectations we heard out there were, everybody was ready to spend boatloads of money - 'I'm going to build this, and I'm going to build that,'" Gregoire said in an interview with The Associated Press.

But "that's not how the money's coming," Gregoire said. "There's not going to be a whole lot of discretion out there for spending the money."

Gregoire's special assistant for the stimulus package, Dick Thompson, said he is estimating Washington's potential share of the federal package in a range from $3.5 billion to $4.5 billion. That estimate is fluid, Thompson noted, because the U.S. Senate is still working on its version of the bill, and the Senate and U.S. House have to negotiate a final package.

Once it arrives, the stimulus money will be channeled largely through a long list of federal programs with different rules and deadlines attached, Gregoire said.

The spending is also being advertised as "use it or lose it," meaning states have to move the dollars out the door, not put them in bank accounts. And in some cases, states won't be allowed to substitute new federal spending for the state's portion of shared program costs. That means a flood of federal money won't necessarily free up gobs of state cash for other uses, as some officials have hoped. (Wash. gov: Stimulus won't be a cure-all, 1/27/09)

So should we call the Governor Chris Hoover or Herbert Gregoire? During the last economic downturn of this magnitude (which occurred in the 1930s), State governors across the country decreased spending on all sorts of programs, including public works and education, in order to balance their budgets. In our current situation, putting more people out of work is insane; an excerpt from an article entitled "A New New Deal Under Obama?" illustrates why:

Federal spending on public works, which has become almost synonymous with the New Deal in popular culture, expanded nearly every year from 1929 to 1938 (see table 1). Yet, total government spending on public works did not regain its 1929 level until 1936, due to drops in state and local public works spending that undercut the federal increases. At first, state and local governments had responded to the deep slump by increasing their public works outlays. However, within a couple of years their resources were largely exhausted and their spending on public works dropped below that of 1929. By 1936, state and local public works expenditures were less than half their 1929 level. (Monthly Review, 12/21/08)

The governors should go to the Obama administration with this telling data and demand more money so they do not have to balance their budgets on the backs of students and workers. We have often pointed out on this blog the contradictions of creating jobs in one sector of the economy while at the same time destroying jobs in another. The argument over federal and state/local spending is a contradiction of a different kind, but it makes about as much sense. Why destroy state and local jobs to make way for federal jobs? This is a wasteful way to do things in a time when we need to focus our resources as efficiently as possible.We ask: why does a common sense approach to this economic downturn have to come from a lowly student group? Whatever the answer, we must organize to challenge the current pretzel logic of Gregoire and the federal government.