Published in the Harrisburg Post-Gazette, July 1, 2010
Though Gov. Rendell and legislative leaders have reached an agreement, we still face a potential budget catastrophe.
Last week, unified Republican opposition prevented the U.S. Senate from overcoming a filibuster to enact a bill that extends key elements of last year’s stimulus legislation.
The bill includes an extension of unemployment insurance and subsidies to COBRA — which enables the newly unemployed to continue their health insurance at affordable rates.
And it includes a six-month extension of FMAP, which provides higher rates of federal support for Medicaid.
The budget negotiated in Harrisburg counts on $850 million in FMAP money.
If Pennsylvania does not get it, the result will be drastic reductions in social service spending and the layoff of as many as 20,000 Pennsylvania government employees, according to estimates from the governor’s office.
This “extender” bill is designed not just to help individuals hurt by the severe recession, but to allow state governments to continue spending at close-to-normal levels even though their tax revenues have dropped precipitously due to our economic troubles.
State government spending is critical to economic recovery. Econometric studies have shown that it is one of the most effective ways of reducing unemployment, directly by preserving public service jobs and indirectly as a result of the goods and services purchased by public employees.
Steven Herzenberg, of the Keystone Research Center estimates that a reduction of $850 million in state spending could lead to the loss of about 10,000 private sector jobs in addition to the public sector ones.
Failing to enact the extender bill will create similar damage in other states. If we are lucky, the result will be lower growth and higher unemployment for the rest of this year.
If we are unlucky, the current economic recovery will stall and drop back into recession.
Pennsylvania Sens. Casey and Specter strongly support an extender bill that includes FMAP funding. So do the Democratic members of our delegation to the House of Representatives.
So why are the Republicans — including Pennsylvania members of the House — standing in the way of enacting this bill?
The official answer is Republicans oppose adding to the deficit. There is no question that there is reason to be concerned about the deficit long term. But most economists, of both liberal or conservative persuasion, believe we should be increasing short-term deficits in a severe recession.
And because the extender bill includes provisions that close tax loopholes — including one that allows wealthy hedge fund managers to pay taxes on their income at rates lower than most Americans — it will reduce the deficit in the long term.
In almost any other year, Republicans as well as Democrats would be rushing to pass the extender bill, because it provides relief to individuals and states.
But this year, Republican leaders in Washington are caught up in the madness of the tea party movement. To this point, the tea party phenomenon and the effort by Republican leaders to genuflect to its 18th century ideas has been more amusing than dangerous.
But in their denunciation of federal policies designed to restore our economy to growth, right-wing extremists and their Republican supporters in Washington are poised to do real damage to our citizens, our commonwealth and our country.
So now it is time for the Republican leadership in the states, including Republicans in Pennsylvania, to stand up and demand action from their party leaders in Washington.
They have to be the voice of reason, standing up to ideologues and encouraging action critical to our state and its citizens.
Tom Corbett, Joe Scarnati, Dominic Pileggi and Sam Smith have an opportunity to help pull the national Republican Party back from embracing the ideology of Herbert Hoover. And if they don’t, we’ll have a better idea what they have in store for Pennsylvania in the future: public policies that serve right wing ideology rather than the needs of most Pennsylvanians.
Marc Stier is the executive director of Penn Action.