Debt Limit Deal Will Hit States and Localities, Too

August 15, 2011 at 2:39 pm

As Americans return from vacation to find shrunken state and local services — from fewer teachers in their children’s classrooms to less help for elderly and disabled residents to tuition hikes at public universities — we hope they’ll connect the dots as well as yesterday’s New York Times editorial did:

Washington should have been trying to find a way to help states avoid the layoffs and cutbacks that have contributed heavily to the high unemployment rate.  Instead, it seems to be doing everything possible to make the situation worse in state capitals around the country.

Three Years of State and Local Job Loss

That’s because the large federal spending cuts in the recent debt-limit deal will inevitably force large cuts in funding for services that states and localities provide, like transportation, education, and environmental protection.

For four years, states and localities have closed their recession-induced budget shortfalls by cutting services, eliminating more than half a million public-sector jobs (see graph), and — to a much lesser degree — raising revenues.  They’ll likely have to take more painful steps like these in response to cuts in federal aid.

The Times notes that state spending “is where government hits closest to home, affecting the size of classrooms, the bulbs in streetlights, the asphalt in potholes, and the lines in emergency rooms,” and it warns that continued cuts in state and local services will “mak[e] life more difficult in every city and town.”  That’s the last thing this nation needs.

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More About Nicholas Johnson

Nicholas Johnson

Johnson serves as Vice President for State Fiscal Policy. You can follow him on twitter @NickCBPP.

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1 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Steve Bruns #

    I’m really baffled at the direction Obama’s political shop seems to be taking. I’m used to political operatives being economically illiterate but this seems politically illiterate as well. Is this just another example of Beltway insularity? Or is it Obama playing to his Constituency of One, i.e. David Brooks?

    Someone help me out here.

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