Republican War on Progressive Federalism
The one real casualty of the brokered compromise on the Recovery Act was the notion of Progressive Federalism.
The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets.
The irony that it is the Republicans who oppose devolving power and money to the states to make their own spending decisions, shows how far from their supposed 'principles' of reduced Federal power they have moved. I have been writing about the concept of New Federalism for a couple of years and it is wonderful to see our President embrace an idea that every CEO understands--innovation happens at the edges. Hopefully during the House-Senate conference process, Republican governors like Jodi Rell of Connecticut, Jan Brewer of Arizona and Arnold Schwarzenegger of California will raise hell with the Republican Caucus to get some of that restored.
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Investors should also raise hell here. Muni bonds have attractive yields and preferential tax treatment but they're only good investments if you believe that the Feds will make sure that the states and cities don't fail. Cutting the aid to states is a bad sign in that regard and it could, and should, raise the cost of borrowing for municipal issuers.
February 7, 2009 11:59 AM | Reply | Permalink
MUNI bonds don't offer a tax advantage if the tax rate goes down a lot!!
When marginal rates were higher, MUNI's were priced much higher (lower yield than comparable taxable bonds).
February 7, 2009 7:03 PM | Reply | Permalink
Why hsould the somewhat more responsible states have to finance California after the Governator has run it into the ground? He was unwilling to make tough decisions, and now wants federal aid so that he can avoid the tough decisions even longer?
Schwarzenegger needs to severely cut the state budget before he gets a penny in federal aid.
Most importantly, before getting a penny in federal aid California needs to send away of all of the illegal aliens that live there.
February 7, 2009 12:56 PM | Reply | Permalink
Schwarzenegger needs to severely cut the state budget before he gets a penny in federal aid
He can do this, without any help from the state legislature?
before getting a penny in federal aid California needs to send away of all of the illegal aliens that live there
In ten sentences or less, how is this supposed to be accomplished?
February 8, 2009 10:21 AM | Reply | Permalink
I think that much of the state money survived the Collins-Nelson-Snowe-Spector committee
February 7, 2009 1:17 PM | Reply | Permalink
OK, I'm confused. If Progressive Federalism is a policy of State's independence, why complain that less financial support from DC is bad? Isn't this an admission that States aren't capable of supporting themselves, or rather living within their means?
If California can't pay the bills then they are going to have to do what everyone else is doing...cutting budgets and jobs.
February 7, 2009 1:23 PM | Reply | Permalink
Well, at least you are one Republican honest enough to admit that your goal is to destroy jobs. Very refreshing!
February 7, 2009 3:54 PM | Reply | Permalink
bluebell, you're close. Destroying jobs is a secondary gain. But what they most want to destroy is government. They have now succeeded in shutting down 10% of government in California and all they need to do is keep increasing that margin. The GOP is responsible for very large decreases in revenue over the last decade or two, much of it to reduce corporate taxes, but when the inevitable crisis occurs, they all chant in unison, "it's not a revenue problem, it's a spending problem." Which they do to hide the fact that it is a revenue problem which they created on purpose, because the corporate agenda now is really to view govt as an obstacle and take it apart to the greatest extent possible. I'm sure Grover "drown it in the bathtub" Norquist is chortling and clapping his pudgy little hands in glee at the progress. If you think this is extreme, google "starving the beast."
What they can't stand is that govt can function as an equalizer. An authoritarian dominance hierarchy is their wet dream, and they won't rest until they have restored us to feudalism.
February 7, 2009 4:28 PM | Reply | Permalink
They won't be happy till they've turned us into a banana republic. You have to feel for the poor Hispanics escaping oligarchies to move here. That's exactly what the Republicans want and they still have no opposition because the Democrats have been intimidated out of making a philosophical case against them. The Norquist types know what they want. They don't want "centrism". How we combat them over the long run offering no argument but postpartisanship is just hugely depressing.
February 7, 2009 4:38 PM | Reply | Permalink
Well let's see, according to this California has the highest income tax rate in the country, is sixth highest for individual taxes overall, and 3rd highest for business burden. Doesn't seem to be a revenue problem to me. But then again, I keep hearing how businesses and wealthy people are moving out of California for less punitive horizons. Maybe you guys should raise those rates some more. Heh.
February 7, 2009 6:40 PM | Reply | Permalink
Oh, devastating argument, Shooter. You know as well as I do that what determines revenue is not the rate on the books, but what people (or corps) ACTUALLY PAY. In, you know, REALITY. Remember reality? Oh, wait -- you're a troll. Never mind.
I would explain how corps and wealthy individuals can afford to hire armies of accountants and tax attorneys to exploit exemptions and loopholes, and lobbyists to create new exemptions and loopholes, and offshore entities and all the other evasions that great wealth can buy. How John McCain explained that in the 2000 campaign. How 3/4 of US companies paid NO taxes at all last year (or was it the year before?). How much the corporate contribution to government has declined in, say, 20 years. I could get the links. But it seems silly, because it's so obvious, and because I think you know that your job here is not to analyze facts but to distort them.
But I do think it's interesting how folks of your type -- and I'm sorry but you do behave like a type -- consistently engage in extreme "macho" posturing which only intensifies the more spectacularly the conservative policies fail. So people who feel outrage at the deliberate destruction of a great nation are whiners. Those who prefer not to be reduced to corporate feudalism, who prefer not to be serfs, or slaves, are insufficiently butch! There's an obsession with the "manly virtues" that never quits. Why is that?
The type also tend to present the double binds created by their policies as simple, natural facts that come out of nowhere -- no context, no history, just "here we are" -- and then demand to know which bad outcome the "cry babies" prefer. CA can't afford what it wants! Life's tough! Grow up! Conveniently ignoring how we got here.
As in California, so it's been in Iraq: It's not easy! What would you whiny liberals do? There's no good solution! (To the problems we cons created.) The solution would have been to NOT GO THERE IN THE FIRST PLACE, which is why 10 million people protested to stop us from going into Iraq. Oh, wait -- I'm sure those 10 million people were just p*****s.
Luckily, it appears the tide of history is sweeping around and past your "movement." So keep fighting that John Wayne fight! Give it all you've got! And keep making yourselves irrelevant, and showing the world the liars you really are. Spending isn't stimulus. It's not a revenue problem. Yeah, right.
February 9, 2009 10:33 PM | Reply | Permalink
Excuse me, are you saying that the state should continue the jobs, and not pay a salary? Most people would call that fraud.
California obviously doesn't have the money to pay for everything they want, just like everybody else. Would you prefer they declare bankruptcy and restaff from scratch without unions?
Or are you just going to pout and whine if Daddy doesn't give you what you want?
February 7, 2009 6:25 PM | Reply | Permalink
No, just government jobs.
February 7, 2009 9:42 PM | Reply | Permalink
Shooter just clings to the corporate/military Big Daddy. That's what makes him feel secure at night. And he needs that, because he's VERY insecure. So insecure, in fact, that he's outraged that the rest of us don't want to spend all our lives servicing Big Daddy in every conceivable way, because if we don't, Daddy might not give him what he wants. That's why he comes here and pouts and whines at the rest of us.
Actually I suspect he was a bullying child. Bullies are always the worst cowards.
February 9, 2009 10:37 PM | Reply | Permalink