A Ruinous Meltdown
A story that is not getting nearly enough attention is the ruinous fiscal meltdown occurring in state after state, all across the country.
Taxes are being raised. Draconian cuts in services are being made. Public employees are being fired. The tissue-thin national economic recovery is being undermined. And in many cases, the most vulnerable populations - the sick, the elderly, the young and the poor - are getting badly hurt.
Arizona, struggling with a projected $2.6 billion budget shortfall, took the drastic step of scrapping its Children's Health Insurance Program. That left nearly 47,000 low-income children with no coverage at all. Gov. Jan Brewer is also calling for an increase in the sales tax. She said, "Arizona is navigating its way through the largest state budget deficit in its long history."
In New Jersey, the newly elected governor, Chris Christie, has proposed a series of budget cuts that, among other things, would result in public schools receiving $820 million less in state aid than they had received in the prior school year. Some well-off districts would have their direct school aid cut off altogether. Poorer districts that rely almost entirely on state aid would absorb the biggest losses in terms of dollars. They're bracing for a terrible hit.
For all the happy talk about "no child left behind," the truth is that in Arizona and New Jersey and dozens of other states trying to cope with the fiscal disaster brought on by the Great Recession, millions of children are being left far behind, and many millions of adults as well.
"We've talked in the past about revenue declines in a recession," said Jon Shure of the Center on Budget and Policy Priorities, "but I think you have to call this one a revenue collapse. In proportional terms, there has never been a drop in state revenues like we're seeing now since people started to keep track of state revenues. We're in unchartered territory when it comes to the magnitude of the impact."
Massachusetts, which has made a series of painful cuts over the past two years, is gearing up for more. Michael Widmer, president of the Massachusetts Taxpayers Foundation, told The Boston Globe: "There's no end to the bad news here. The state fiscal situation is already so dire that any additional bad news is magnified."
California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.
In the first two months of this year, state and local governments across the U.S. cut 45,000 jobs. Additional layoffs are expected as states move ahead with their budgets for fiscal 2011. Increasingly these budgets, instead of helping people, are hurting them, undermining the quality of their lives, depriving them of educational opportunities, preventing them from accessing desperately needed medical care, and so on.
The federal government has tried to help, but much more assistance is needed.
These are especially tough times for young people. "What we're seeing now in Arizona and potentially in New Jersey and other states spells long-term trouble for the nation's children," said Dr. Irwin Redlener, a pediatrician who is president of the Children's Health Fund in New York and a professor at Columbia University's Mailman School of Public Health.
"We're looking at all these cuts in human services - in health care, in education, in after-school programs, in juvenile justice. This all points to a very grim future for these children who seem to be taking the brunt of this financial crisis."
Dr. Redlener issued a warning nearly a year ago about the "frightening" toll the recession was taking on children. He told me last April, "We are seeing the emergence of what amounts to a ‘recession generation.' "
The impact of the recession on everyone, of whatever age, is only made worse when states trying to balance their budgets focus too intently on cutting services as opposed to a mix of service cuts and revenue-raising measures.
As Mr. Shure of the Center on Budget noted, "The cruel irony is that in a recession like this, the people's needs go up at the same time that the states' ability to meet those needs goes down."
Budget cuts also tend to weaken rather than strengthen a state's economy, especially when they entail furloughs or layoffs. Government spending stimulates an economy in recession. And wise spending is an investment in everyone's quality of life.
All states have been rocked by the Great Recession. And most have tried to cope with a reasonable mix of budget cuts and tax increases, or other revenue-raising measures. Those that rely too heavily on cuts are making guaranteed investments in human misery.
© 2010 The New York Times