Waiting for help

Gov. Jon S. Corzine is right to delay introduction of the state’s budget, given that the incoming Obama administration is promising a massive stimulus package that is expected to include money for cash-strapped states.

Consider the mess New Jersey is in and what a lack of federal aid might mean:

Corzine has said declining tax revenues amid the national recession could push next year’s budget as low as $29 billion, down from $32.9 billion this year.

That’s nearly $4 billion — which would only add a lot of formerly employed state, county and local workers to the growing list of out-of-work New Jerseyans at a time when state (and local) services will be in great demand. Cutting state spending, which Paul Krugman rightly raised concerns about in his column yesterday, will do little more than slow efforts at the federal level to staunch the economic decline.

Krugman called the governors “50 Herbert Hoovers,” a group being forced to “(slash) spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.”

These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.

He’s not laying blame at their feet. On the contrary, he reminds us that many — not all, as New Jerseyans know too well — of the states’ problems stem from the larger economic mess, long-term federal negligence of state issues and the Bush administration’s clueless response to the meltdown.

It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.

In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.

And shredding the social safety net at a moment when many more Americans need help isn’t just cruel. It adds to the sense of insecurity that is one important factor driving the economy down.

That leaves them stuck between a rock and a hard place. I have been very vocal in my criticism of the state — governors and legislators of both parties, including the current crowd — and its willingness across nearly two decades to defer painful budget decisions. The list of bad decisions made with politics and not fiscal health in mind is long and does not need another recounting. Suffice to say that we went over the cliff a long time ago.

That said, “even the best-run states are in deep trouble,” Krugman writes, and “we shouldn’t punish our fellow citizens and our economy to spite a few local politicians.”

So President-elect Barack Obama should listen to Corzine and David Paterson of New York and Ted Strickland of Ohio, who is

pushing for federal aid to the states on three fronts: help for the neediest, in the form of funding for food stamps and Medicaid; federal funding of state- and local-level infrastructure projects; and federal aid to education.

This kind of aid can go a long way to easing the economic pain while building a new foundation for future growth.

Author: hankkalet

Hank Kalet is a poet and freelance journalist. He is the economic needs reporter for NJ Spotlight, teaches journalism at Rutgers University and writing at Middlesex County College and Brookdale Community College. He writes a semi-monthly column for the Progressive Populist. He is a lifelong fan of the New York Mets and New York Knicks, drinks too much coffee and attends as many Bruce Springsteen concerts as his meager finances will allow. He lives in South Brunswick with his wife Annie. View all posts by hankkalet