This morning’s Wall Street Journal (subscription required) offers a look into the liberal mind Richard Ravitch, Lieutenant Governor of New York, bemoans the strings attached to federal stimulus money. Ravitch says the strings are making it harder for states to cut spending and manage their budgets. He writes:
The federal stimulus has provided significant budget relief to the states, but this relief is temporary and makes it harder for states to cut expenditures. In major areas such as transportation, education and health care, stimulus funds come with strings attached. These strings prevent states from substituting federal money for state funds, require states to spend minimum amounts of their own funds, and prevent states from tightening eligibility standards for benefits.
Because of these requirements, states, instead of cutting spending in transportation, education and health care, have been forced to keep most of their expenditures at previous levels and use federal funds only as supplements. The net result is this: The federal stimulus has led states to increase overall spending in these core areas, which in effect has only raised the height of the cliff from which state spending will fall if stimulus funds evaporate.
Ravitch’s piece vacillates between a rant against the federal government and a plea for help so that the states can be saved from themselves. Strings attached to federal money? That may be news to Mr.Ravitch, but certainly to not a lot of other people. Aside from obvious concerns about cost, the “maintenance of effort” spending requirements (which forbid states from reducing budgets) and prohibitions on tightening benefit eligibility standards, were the very things that conservatives found so odious last year. You have to wonder where Mr. Ravitch when the stimulus legislation was being discussed.
Many of Mr. Ravitch’s observations about the budgetary impacts of the stimulus are correct – albeit belatedly. However he’s wrong to think more stimulus money is necessary to help resolve this mess. The fact is, stimulus money only allowed policymakers to delay difficult decisions, but we knew that $787 billion dollars ago. More federal dollars equal more federal control. It’s an equation some of us never learn.