Senate Clears Way for Emergency Aid to States

Thursday, August 05, 2010

WASHINGTON – The Senate on Wednesday cleared the last major hurdle to approving a $26 billion aid package for cash-strapped states that is expected to keep some 140,000 teachers from being laid off nationwide and sustain medical care for the poor.

Governors from nearly every state had pressed for help in the face of falling revenues and state budgets decimated by the recession and lagging economic recovery. Many states had already counted on the extra federal aid in their spending calculations – raising the possibility of new budget crunches if the measure failed.

"All over the country right now, there are people breathing a big sigh of relief," said Sen. Michael Bennet (D-Co.), a former state schools superintendent, after two Republicans joined with all 59 Democrats to block a threatened GOP filibuster.

The Senate is scheduled to give its final approval to the bill Thursday. And House Speaker Nancy Pelosi said she would call the House, which has already begun its August recess, back into session next week to approve the senate bill and send it to President Obama for his promised signature.

The aid for the states has been a priority for Obama administration.

The Senate package includes $16 billion for the Medicaid, the joint state-federal program to provide healthcare to low-income Americans. The recession and continuing high unemployment had sent Medicaid costs soaring and created a major problem for many states.

Enhanced Medicaid funding was first made available in the 2009 economic recovery act but is scheduled to expire in December. The Senate bill package would extend aid for six more months through June 2011.

The package also provides $10 billion in education funds, and the National Education Association estimates 138,000 teachers' jobs education jobs, including 13,700 in California and 5,050 in Illinois, could be saved.

Thousands of other public workers – police, firefighters – could have their jobs spared with the extra money flowing to the states, Democrats say.

"This federal money is critical to preventing deeper pain and deeper job losses in California and other states and we are hopeful the Senate will quickly pass the extension," said a spokeswoman for Republican Gov. Arnold Schwarzenegger.

Many states have already been forced to make tough budget-cutting decisions and were counting on help from Washington.

"The easy choices have essentially been made by the states," said Arturo Perez, a fiscal analyst at the National Conference of State Legislatures. "We're talking about a situation where state policy makers face even more difficult decisions about how to balance their budgets if that money is not available."

Union-backed advocacy groups produced ads this week urging Republican Sens. Susan Collins and Olympia Snowe of Maine to cross over and support the measure. Both did, giving Democrats the 61-38 super majority they needed to invoke cloture and clear the way for final passage.

Earlier efforts to provide aid to the states were derailed by Republicans and some Democrats who insisted that such federal spending be offset with cuts elsewhere. The current, slimmed-down package covers the cost and provides additional savings by tightening corporate tax provisions and cutting spending on several programs.

Even so, Republicans argued Wednesday that the federal government was just as broke as the states, and could not afford what they characterized as another bailout. Governors, they insisted, need to make tough budget cuts.

"This money doesn't appear on trees," said Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee.

They also suggested saving teachers' jobs was payback to education unions who support Democrats.

"When you go to the essence of what this bill is about, it's to pay off education unions," Gregg said. "Let's not be coy."

Politically, the fight over aid to the states reflected the strategies the two major parties are pursuing as they head into the August recess and the fall campaign.

Democrats, struggling to retain their majority in both chambers, are positioning themselves as the party that is helping ordinary Americans in the difficult economy. Republicans, scenting an opportunity to make big gains as a result of voters' unhappiness over the economy and the deficit, are portraying themselves as the party of fiscal responsibility and opposition to big government.

The immediacy of the budget crises in many states apparently helped win over two critical GOP votes yesterday. But Republicans again displayed exception unity.

And the partisan divide is expected to continue or even deepen when Congress returns after Labor Day.