New York will get its fair-share of the federal stimulus cash, but local residents shouldn’t expect a whole lot in terms of new infrastructure or anything good like that. Instead, most of the cash will go to filling holes — not potholes, but holes in the budget. New York, of course, is facing a monster deficit, and we probably won’t slash our way to the promised land:
Reuters: New York state could receive at least $5 billion in direct aid from President-elect Barack Obama’s planned stimulus package, helping to shrink a historic budget deficit, according to U.S. Sen. Charles Schumer.
The stimulus package is expected to include $80 billion to $100 billion in additional funding to localities and states for Medicaid, the federal health care funding program for the poor, the elderly and the disabled, Schumer said in a statement.
The package will also include money for infrastructure projects, said the statement, which was released ahead of a news conference scheduled for Monday.
“New York’s (Medicaid) matching rate could be temporarily increased by approximately 10 per cent — resulting in at least $5 billion a year,” said the statement.
“This money would be injected directly into the state coffers and could help defray budget cuts and future tax hikes,” the New York Democrat said.
Is filling a Medicaid budget gap actually economic stimulus? Not really. Will we let states like New York and California go bankrupt (or de facto bankrupt)? Nope. But as we’ve noted, the easiest way to transfer liabilities from the states to the federal government would be the nationalization of healthcare. Until we do it in one big policy action, expect to see a lot more incremental action like this. Eventually