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Recovery Deal Reached; State Aid Slashed Compared to House Bill

PSN on February 12, 2009 - 12:25pm

Recovery Deal Reached; State Aid Slashed Compared to House Bill

Thursday, February 12, 2009

PERMALINK: http://www.progressivestates.org/node/22669

Growing-Economy

By: Nathan Newman

Recovery Deal Reached; State Aid Slashed Compared to House Bill

Negotiators between the Senate and House approved a deal late Wednesday night for a recovery package.  The good news is that the Senate agreed to a significant recovery package at all, since at one time the legislation faced the threat of a filibuster that would have blocked almost all stimulus spending approved in the original House bill.

While all details of the full compromise between the House and Senate have not been released, the best news for state governments facing deficits is:

  • Congress approved about $90 billion to help states pay for Medicaid health care for the poor.
  • Another $150 billion will go to infrastructure including transportation, high-speed Internet service and energy projects.  This includes $29 billion for highways, $8 billion for rail, $8.4 billion for mass transit projects, $7 billion for broadband access, $11 billion to upgrade the nation’s electrical grid, and $5 billion to weatherize low-income homes.
  • Increases funding for food stamps, job training funds, housing assistance, Head Start and child care
  • Money for broadband focused on grants, mostly for rural areas, rather than tax credits to the telecom industry as the Senate had proposed.

The bad news so far announced:

  • Money for the State Fiscal Stabilization Fund and school construction was slashed from $99 billion in the House version down to a combined $54 billion in the compromise version. The resulting cut of $45 billion will lead to massive pain and suffering in states across the nation as education funding is slashed, medical access is cut and cops are removed from their beats.  
  • And while the final deal kept money to subsidize 60% of COBRA payments for the unemployed, it deleted the funds approved in the House to allow lower-income unemployed to access health benefits through Medicaid.  

It could have been far worse. Even with projections of state governments facing a collective $350 billion in deficits through the 2011 fiscal year, 36 US Senators actually voted for an amendment that would have eliminated essentially all aid to the states with nearly all spending replaced with tax cuts.  It is a bad sign for future debates that there is such a large core of Senators so completely indifferent to states' needs during this economic and fiscal crisis.   

 

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Rewarding-Work

By: caroline Fan

Montana Defeats Attack on Minimum Wage, Cost-of-Living Increases for Working Families

Recently conservatives in Montana sought to roll back the annual cost-of-living wage increases for minimum wage workers that voters overwhelmingly approved in 2006 by 73-27%. Montana is one of twenty-seven states (plus the District of Columbia) that has a minimum wage higher than the federal minimum wage, and one of eleven states that index the minimum wage to the consumer price index. Montana progressives successfully fought a conservative push by the restaurant industry to keep wages stagnant.

A bipartisan coalition in the Republican-led state Senate prevented the restaurant lobby from gutting future indexing of wages to inflation and freezing the minimum wage for tipped workers at $6.15/hour despite an increase to $6.90/hour which took effect on January 1, per the passage of the 2006 initiative. That proposed change would have cost minimum wage workers $1560 a year, far more than such workers would receive under the $400/person tax cuts from the federal stimulus bill. Fortunately, the general cost-of-living adjustment (COLA) was maintained in committee.

This action was then followed by a full Senate vote to defeat a bill (29 to 21) that would have essentially frozen wages for tipped employees by allowing employers to include tips in calculating the minimum wage they pay their workers. The wage freeze and tip inclusion in the minimum wage both would have placed tipped employees, such as restaurant servers, at a precarious disadvantage since tips can vary from day to day, and are even harder to rely on in an uncertain economy during which fewer people go out to eat. The failure of a conservative-led Senate in Montana to pass a minimum wage freeze is yet another demonstration of the.political unpopularity of efforts to cut away at the minimum wage.

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Increasing-Democracy

By: Christian Smith-Socaris

RNC Files Lawsuit to Strike Limits on Soft Money Spent in States

The Republican National Committee has filed a lawsuit against the Federal Elections Commission, hoping to prevent restrictions on donations to political parties designated for spending on state-level campaign work and congressional redistricting, among other things.  The RNC has teamed up with James Bopp, the county's top crusader against campaign finance regulations, who has had substantial success of late.  He argued the Wisconsin Right to Life case that eviscerated McCain-Feingold's ban on corporate and union spending on advertisements in federal elections.  (He is also himself a member of the RNC and counsel to the rightwing, socially conservative group Focus on the Family).  Previously his mission has been to tear down all restrictions on independent groups, but in this case Bopp is expanding his goals to include the political parties themselves.  And while new Democratic National Committee Counsel Bob Bauer, late of the Obama campaign and an election law scholar in his own right, thinks the law and the constitution are on their side, the Robert's Supreme Court is clearly on a path toward dismantling the campaign finance regime we have now.

If Bopp and the RNC are successful, the unlimited contributions to the national parties for money spent influencing state-level politics would open a huge loophole in states that currently limit donations to state parties. Also, given that the soft money ban would remain for dollars spent on federal elections, the amount of money flowing into state and even local races from the national parties would likely be enormous.  Donors looking to curry political favor by writing huge checks have few opportunities to do so under current law, ensuring that any avenue that opens in the future will be used widely.

The RNC has been pushed to this point, desperate to destroy a law signed by George Bush and championed by John McCain, because they seem unable to tap the small donor base that has reinvigorated the Democratic Party's fundraising.  When McCain-Feingold passed, conventional wisdom had it that the law would benefit the Republicans, who held a sizable lead in hard money donations.  Ironically, the RNC is now trying to keep the DNC, which is eager to defend the law, out of the case.  Of course, publicly financed elections are the real solution to this morass.

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Research Roundup

Facing Deficits, 40 States are Imposing or Planning Cuts that Hurt Vulnerable Residents - An update by the Center on Budget and Policy Priorities finds painful cuts increasing in public health, programs for the elderly and disabled, K-12 education, colleges and other programs around the country, while 14 states have raised new revenue to address the fiscal crisis in the states.

Target Practice: Lessons for Poverty Reduction -  A report by CLASP on the lessons those seeking numerical goals in reducing poverty can learn from the experience targetting reductions in climate change and homelessness.

The Other College: Retention and Completion Rates Among Two-Year College Students - Despite making up 40 percent of total college enrollment, this report by the Center for American Progress argues for more attention to problems faced by students of two-year colleges, who receive degrees at a far lower rate than those at four-year colleges. The paper argues that new policy strategies are necessary to address the unique problems of two-year institutions and their students.

 

Please email us leads on good research at research@progressivestates.org

Resources

Recovery Deal Reached; State Aid Slashed Compared to House Bill

Progressive States Network - Why States Need to be a Focus for Any Economic Recovery Plan
Center for Budget and Policy Priorities - State Budget Troubles Worsen
Office of US House Speaker Nancy Pelosi - Conference Report on American Recovery and Reinvestment Act: Preliminary Overview

Montana Defeats Attack on Minimum Wage, Cost-of-Living Increases for Working Families

National Employment Law Project, Montana Senate Rejects Minimum Wage Attacks
Progressive States: Indexing Minimum Wage
Economic Policy Institute - Securing the wage floor: Indexing would maintain the minimum wage's value and provide predictability to employers
US Department of Labor, Minimum Wage in the States

RNC Files Lawsuit to Strike Limits on Soft Money Spent in States

RNC Complaint
Progressive States Network - Clean Elections
NPR - Jim Bopp's Fight to Liberate Political Money
Bob Bauer - The RNC Attack on McCain-Feingold—in Association with Mr. Bopp

3 Steps Forward

1. Progressive Tax Reform Gaining Steam in Missouri and Kentucky
2. Some states and local governments revisit anti-immigration laws
3. OR: Governor signs Oregon stimulus legislation

2 Steps Back

1. TX: Health and human services are battleground for state privatization
2. CA: Schwarzenegger to send layoff warnings to 20,000 workers

Masthead

The Stateside Dispatch is written and edited by:

Nathan Newman, Interim Executive Director
Caroline Fan, Immigration and Workers' Rights Policy Specialist
Julie Schwartz, Broadband and Economic Development Policy Specialist
Christian Smith-Socaris, Election Reform Policy Specialist
Adam Thompson, Health Care Policy Specialist
Austin Guest, Communications Specialist
Marisol Thomer, Outreach Coordinator

Please shoot us an email at dispatch@progressivestates.org if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

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