* My Sun-Times column today is about an issue I’ve discussed several times since the federal “stimulus” plan was first debated. The states are getting the shaft and it is hurting everyone…
This winter, when you’re freezing your tail off waiting extra long for a city bus because of CTA budget cuts, you might want to blame President Obama.
OK, maybe not just Obama. The people responsible for the financial systems meltdown started this disaster.
The economic meltdown that began on Wall Street and then morphed into our current “Great Recession” has all but dried up state and local government revenues.
Obama did support a major cash infusion to state and local governments, but he backed away from a more ambitious plan when “moderate” Republicans and rural Democrats objected. You can blame them for your long bus wait as well.
Illinois did get some money out of the deal, but it wasn’t nearly enough, and the resulting deficit is absolutely crippling.
The political climate makes it impossible to raise taxes to stem the state’s frightening wave of red ink. It’s so bizarre out there that moderate Republican gubernatorial candidate Kirk Dillard now refers to Obama as a “socialist.” That’s the same Kirk Dillard who made a TV ad for Obama’s presidential campaign.
Without revenues, Illinois has been cutting services, borrowing short-term and delaying billions in payments to human service providers and other vendors.
And because the state is in such a bind, it can’t help properly fund the CTA. Gov. Quinn came up with a plan this week to let senior citizens keep their free rides, but it amounts to chump change, and the overall reorganization plan merely delays the day of final reckoning for a year or two — if that.
Meanwhile, transit routes are being slashed and jobs are being cut during the worst employment market in memory.
Even worse, an absolutely essential public asset is being allowed to whither on the vine. Politicians such as Quinn fear that a fare increase will result in a voter backlash. Voters are just fed up with Illinois politicians getting in their pockets, so he and the others do have a point. But how long can the transit system remain viable if it’s being scaled back year after year?
Now, back to Obama.
The projected state deficit is about 2 percent of Illinois’ gross domestic product. Because we can’t print money or borrow long-term like the federal government does, the deficit is a direct drag on Illinois’ economy. For instance, when the state pays a vendor six months late, that vendor has to borrow to make payroll, and because businesses can’t borrow like they used to, workers are let go, or vendors go under.
Illinois is not alone. Revenues have dried up for almost every state and local government in the nation, so they’ve cut, cut, cut. While Obama is trying to hit the economic gas pedal, state and local governments are slamming on the economic brakes. National liberal blogger Duncan Black has taken to calling governors “50 little Hoovers” for their Herbert Hoover-like economic policies of cutting their budgets during an economic catastrophe.
Black, who has a Ph.D. in economics from Brown University, is part of a growing chorus of people who are demanding that the federal government do something to prevent state and local governments from derailing a recovery.
The Democrats who run things in Washington, including Obama, ought to listen. If they want to get re-elected next year, they have to fix the economy. And they can’t make the fix stick if every forward step they take is partially or totally nullified by the states’ budget problems.
Your long bus wait is just a symptom of the overall problem. And it’s going to get worse unless Obama acts soon.
