In the massive $789 billion economic stimulus package signed by President Obama in late February, there was a meaty $135 billion devoted expressly to limiting layoffs in state governments. But that cash infusion doesn’t seem to be working as well as some would have hoped, as states are continuing to lay off public employees.
The $789 billion stimulus bill was passed, of course, only after weeks of debate between Republicans, who wanted deeper tax cuts, and Democrats, who encouraged more generous spending than even the President suggested. The House of Representatives and the Senate differed on the bill too, with each chamber trimming the original proposed sums in order to secure the votes of more economically conservative members. Maine Senator Susan Collins (R) called the House-passed bill “bloated.” The Senate cut from their bill $40 billion of stabilization funds meant to fill in deficits in the states’ budgets for education and other services.
The change, a pinprick in the Senate's $800 billion stimulus behemoth, was made to win over three moderate Republicans and a few conservative Democrats, whose support was needed to push the vote count over 60 and prevent a filibuster.
But even after the bill was revised, passed, and signed, the complaints continue. Right-wing economic analysts accuse President Obama of fear mongering, claiming that his repeated references to the “unprecedented economic crisis” are “unjustifiable.” University of Maryland research scientist John Lott wrote that Obama's rhetoric scares people and that the government subsidies will actually raise unemployment as people shift industries. To these analysts, the changes encouraged by Congress’s stimulus package are more reminiscent of those that caused the Great Depression than of the large-scale job-creating strategies of the New Deal that helped to end it.
Whether Obama is employing scare tactics or not, one goal of the stimulus package in February was in fact to prevent states from too drastically cutting staff at a time when American unemployment was increasing by 700,000 monthly.
At the other end of the spectrum, Western Washington University faculty union president Bill Lyne complains that the portion of the budget devoted to limiting state layoffs just isn’t big enough. "It's barely letting us keep our noses above water," Lyne said. The state of Washington has settled on a budget plan within the last few weeks that will likely result in the layoffs of 1,000 more workers in public education. Other states are following, including Arizona, which has already laid off 800 social service workers this year and halted its policy of investigating all complaints of child and elder abuse. Other states, such as Missouri, are simply letting the layoffs happen and spending a large percentage of their $2.1 billion stimulus fund on tax returns.
Meanwhile, some states are just plain grateful. Maine, whose senators were won over only through the cuts to the stimulus package, celebrated only having had to lay off 250 workers. "Without any recovery funds . . . we would be in a very, very different situation," Maine finance commissioner Ryan Low said.
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