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Thursday, July 30, 2009

What You Might Not Know About the Recovery

Mr. Biden's recent travels seem to have left him out of touch with what is going on in the States across our country (What You Might Not Know About the Recovery, New York Times, July 28, 2009).

From California to Maine, States are cutting into vital services in order to balance their budgets as they are constitutionally required to do. Mr Biden is correct that stimulus money is going to the states, but it is insufficient to stem the hemorrhaging due to massive declines in state income due to loss of capital gains taxes, and sales and income taxes. Worse still, states are cutting aid to local municipalities; these in turn have to make further cuts in their services.

We need another stimulus directed aat the states. About 20% of each states 2007-2008 budget would be enough to make state finances whole. If we do not do this, Federal and State governments will be working at cross purposes and the present stimulus funds will be all but wasted.

Yes, more stimulus means more debt, but when the economy recovers, this can be paid off if wise fiscal policies are followed.

Sent to New York Times

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