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White House Backs Sanford on Stimulus:

Yesterday, the White House acknowledged that state governors, not state legislatures, control the acceptance and disposition of stimulus money. The AP reports:

South Carolina Gov. Mark Sanford has won a key victory in his fight to control $700 million in federal stimulus money intended to help the state's schools, with the White House acknowledging in a letter released Wednesday that state legislatures can't overrule governors who don't want the money.

White House budget chief Peter Orszag said there is no provision in the stimulus law for state lawmakers to accept that money without approval by the governor.

Sanford, a Republican, has said he may decline some of the state's $2.8 billion in stimulus money because the White House won't let him use the cash to pay down his state's debt, including bonds and looming retirement system liabilities. South Carolina started the fiscal year with $8.1 billion in total bonds outstanding, according to the state's comptroller.

The White House remained critical of Sanford's position, disagreeing with his decision to reject a portion of the stimulus funds allocated for his state, but acknowledged his authority to reject the funds.

Prof. S. (mail):
Life imitates the Onion?

Maybe next time they'll actually read a 13-figure bill before they sign it. Had they done so, they may have put in the provision that Orszag refers to.
4.2.2009 9:14am
Soronel Haetir (mail):
I don't understand how a governor can accept future obligations on their own. That seems even more problematic than the legislative override idea.
4.2.2009 9:45am
A Law Dawg:
Perhaps this is Obama calling Sanford's bluff.
4.2.2009 9:49am
PatHMV (mail) (www):
I'm concerned that a federal bill dictates the relative distribution of power in state government. Really, the bill should simply provide that the state may accept or reject various portions of the stimulus, and simply leave it for state law to control whether the governor, the legislature, or (preferably) the normal interaction between the two determines what will be done with the money.

The people of the state of South Carolina have their own constitution, setting forth the distribution of powers between the legislature and the governor. Some states may favor a legislative-centric distribution of powers. Other states may wish to see a strong executive. Those are all decisions for the people of the several states to make, not the federal government.
4.2.2009 9:58am
Ken Arromdee:
I don't get it. It was my understanding that the reason rejecting the stimulus is even an issue is that the money comes with strings attached. It would be absurd for a governer to refuse to accept money that creates no obligations. Yet this article says nothing about such strings.

Then the article says that "he argues it's irresponsible to patch a budget with borrowed money that will heap new burdens on taxpayers and force painful state cutbacks later when the money isn't available." Which sounds even stranger to me... in what way is the stimulus borrowed money? He's not allowed to use it to pay back borrowed money, true, but it's not as if accepting it would increase the amount of borrowed money compared to not accepting it.

What's going on here?
4.2.2009 10:15am
rosetta's stones:

"...in what way is the stimulus borrowed money? He's not allowed to use it to pay back borrowed money, true, but it's not as if accepting it would increase the amount of borrowed money compared to not accepting it."


The stimulus money is borrowed Chinese money, and SC voters are obligated to pay their share of that debt.

Additionally, the stimulus money comes with strings attached, which obligate present and future state expenditures... the Beltway honorables will see to that. Assuming his motivations are pure, Sanford obviously doesn't want to take on those strings which attach the state to that present and future debt.
4.2.2009 10:28am
Ken Arromdee:
So is it just really bad news reporting, which fails to say that the governor doesn't want the strings?

(As for the borrowed Chinese money, wouldn't SC have to pay it regardless, since it would go into the national debt and refusing to take the stimulus money wouldn't keep the federal government from taxing the people to pay for it?)
4.2.2009 11:04am
wfjag:

White House budget chief Peter Orszag said there is no provision in the stimulus law for state lawmakers to accept that money without approval by the governor.

That's not really the issue. The issue is whether the federal government can force states to administer a federal program, including interfering in the way the state's constitution allocates authority between its executive and legislative branches. The federal government lacks such authorities.

States are not mere political subdivisions of the United States. State governments are neither regional offices nor administrative agencies of the Federal Government. The positions occupied by state officials appear nowhere on the Federal Government's most detailed organizational chart. The Constitution instead "leaves to the several States a residuary and inviolable sovereignty," The Federalist No. 39, p. 245 (C. Rossiter ed. 1961), reserved explicitly to the States by the Tenth Amendment.

Whatever the outer limits of that sovereignty may be, one thing is clear: The Federal Government may not compel the States to enact or administer a federal regulatory program.

New York v. United States, 505 U.S. 144, 187 (1992).
4.2.2009 11:07am
Hannibal Lector:
Federal money always comes with strings (mandates") attached. Accepting the money always means committing to present and future expenditure of state funds in ways not totally controlled by the state. If South Carolina is in financial difficulties accepting the money may provide a modicum of temporary relief but only at the expense of an excess of long-term pain.

More generally, as to what the stimulus money is "stimulating" in other states that have accepted it, I can only speak from personal experience: in my state slews of non-profits, manned almost entirely by Democrats, have already begun applying for the expected windfall of grant money. Most of it will be expended on extremely low-paying service jobs that are filled by un-skilled workers doing absolutely nothing for the economy. The remainder will go for their over-payed and politically-active supervisors. Think Chicago-machine applied across the nation.
4.2.2009 11:09am
PatHMV (mail) (www):
What does happen to the "stimulus" money which is refused? Liberals claim that it's going to be borrowed anyway, as if this money is actually just sitting there in some giant bank account already. I don't think that's necessarily the case.

I know in my state's annual budget, there are provisions for how to handle money which is appropriate to agencies but not spent. I assume there are similar provisions of some sort in federal spending bills, including this catastrophic embarrassment of a "stimulus" bill. Has anybody finally had time to read it, to find out if money not accepted by a state is spent on other things, or what?
4.2.2009 11:17am
RPT (mail):
Can someone explain how this decision has any benefits for South Carolinians? Certainly it enhances Sanford's conservative credentials and ambition, but how does it help the actual constituents?
4.2.2009 11:19am
Soronel Haetir (mail):
RPT,

The benefit to SC residents is that they are not on the hook for future services that the state may not be able to pay for.

I haven't been able to find the details, but the unemployment extension as an example, if the stimulus money is accepted now the state then has to maintain that extension for some period after the federal money expires.
4.2.2009 11:24am
PatHMV (mail) (www):
Ok, I think I found the answer to my own question:

(f) REALLOCATION.—The Governor shall return to the Secretary any funds received under subsection (e) that the Governor does not award as subgrants or otherwise commit within two years of receiving such funds, and the Secretary shall reallocate such funds to the remaining States in accordance with subsection (d).


This is in the section on the State Fiscal Stabilization Fund, found on page 165 of the bill.

RPT: I suggest you read Governor Sanford's explanation. Paying down the state's deficit would make a huge impact in South Carolina, freeing up many millions of dollars a year permanently. The "stimulus" money is only for two years. It's never a good idea to use "one time" money to pay for increased levels of on-going spending.

In another area, consider the road construction being funded by the "stimulus" disaster. The feds pay for these nice new roads. Well guess what... in a few years, those roads are going to need maintenance work. Are the feds going to pay for that, too? No. Building those roads with federal dollars is going to result in a substantial increase in state spending requirements down the road.

In Louisiana, we're turning down money for an expansion of unemployment insurance, because we won't have the money to pay for it in 2 years when the federal money runs out. It's not responsible to change a program like that, get people used to it, expecting a certain level of benefits, and then cut it back. It's also politically difficult to do.
4.2.2009 11:31am
ray_g:
Governor Sanford is doing absolutely the right thing. Federal money always comes with strings, and another concern is that the Feds have a bad habit of changing the rules later on. I wish the governor of my state (California) had done the same thing. Yes, that money would be very helpful now, but this tendency to grab money now and not worry about what happens later is what got us into this mess in the first place.
4.2.2009 11:34am
rosetta's stones:

"(As for the borrowed Chinese money, wouldn't SC have to pay it regardless, since it would go into the national debt and refusing to take the stimulus money wouldn't keep the federal government from taxing the people to pay for it?)"


It's true that the total of borrowed Chinese money may not be affected by one state's decision to decline it. It should and likely would if multiple states declined it, but politicians being as they are, not many will think longterm on this, I suspect. They don't think longterm, they grab the cash when they can. This is what makes Sanford's statements so striking, assuming he really means it.

That's the whole point of this stimulus exercise though, to use shorterm motivations to influence local government actions in the longterm. The Federal government is attempting to control the longterm actions of other levels of government, using the borrowed Chinese money as bait, to lure them into those actions. Thus, not only does the federal government grow, but that growth is used to leverage government growth at the state and local levels. Very clever, but Sanford apparently doesn't want to be leveraged.
4.2.2009 11:52am
LawMan 5000:
In Louisiana, we're turning down money for an expansion of unemployment insurance, because we won't have the money to pay for it in 2 years when the federal money runs out

At the risk of sounding cynical, I think South Carolina, Louisiana and Alaska are making noises about turning down stimulus money because their governors have national political aspirations, not because they are afraid of getting "hooked" on revenue that they will expire. I do not think the refusal of stimulus money is good for those states and I believe that the amounts that they end up turning down will be marginal to the total federal stimulus they will receive.

I am not one to always cry "politics" but in this case, I see nothing more than posturing.
4.2.2009 11:54am
LawMan 5000:
The first sentence of that post was supposed to be in italics
4.2.2009 11:55am
byomtov (mail):
In Louisiana, we're turning down money for an expansion of unemployment insurance, because we won't have the money to pay for it in 2 years when the federal money runs out. It's not responsible to change a program like that, get people used to it, expecting a certain level of benefits, and then cut it back. It's also politically difficult to do.

Bobby "Volcano" Jindal is turning down about $100 million to avoid having to expand unemployment insurance by $12 million/yr starting a few years from now. That $12 million amounts to an increase of less than $6/yr per worker in the state.
4.2.2009 11:57am
David M. Nieporent (www):
That $12 million amounts to an increase of less than $6/yr per worker in the state.
Sure. And it's not your $6/yr, so it's no big deal.
4.2.2009 12:08pm
wfjag:

At the risk of sounding cynical, I think South Carolina, Louisiana and Alaska are making noises about turning down stimulus money because their governors have national political aspirations, not because they are afraid of getting "hooked" on revenue that they will expire.

LawMan 5000 -- can't say about South Carolina or Alaska, but as to Louisiana you sound sadly ignorant. I'm sure that Pat can provide even more details, but for decades similar financing of permanent programs using temporary money was the norm in Louisiana. The result was bloated and inefficient government, a generally stagnant economy, and a poor public education system. Given its location and resources, Louisiana should have one of the strongest economies in the nation. Based on tonnage, the largest ports in the US include New Orleans (#1), Baton Rouge (#4) and Lake Charles (#7). However, based on value of goods and jobs created, Louisiana ports lag far behind other Gulf Coast ports. Similarly, the Baton Rouge to New Orleans strip is accurately called "America's Ruhr Valley." However, due to freely handed out tax benefits (in particular the Industrial Tax Credit -- granted by a state agency that absolves industry from paying local taxes), these industries have not provided much in the way of tax revenues to local governments for schools, roads, police and fire protection, and other services local government usually provides. The Homestead Exemption, which exempted most middle and upper-middle class homes from local property taxes further reduced local governments' revenues. This made the state government the source of most funds local governments needed to operate. However, on the state level, as the La. Governor has a line-item veto, it is economic suicide for any local governmental official to complain about abuses. Further, the state government was quite adept at providing bread and circuses diversions, and not infrequently re-financed existing debt issues to generate one-time money to pay for permanent programs.

So, whatever the La. Gov.'s future political plans, he also can point to a long history of similar financial mis-management as a good reason to avoid using one-time money to finance a permanent program.
4.2.2009 12:16pm
geokstr:

That $12 million amounts to an increase of less than $6/yr per worker in the state.

Certainly, but piled on top of all the other costs per year per worker/resident, it adds up to the gargantuan monstrosity that government has become.

Everett Dirksen, a Democratic Senate leader from the sixties, already understood the concept back then when he said "A billion here, a billion there...pretty soon you're talking real money." And that was when the entire federal budget was 100 billion dollars.

Just another example of how the inexorable, implacable growth of government occurs and why it will not be stopped until something cataclysmic happens. Give a material benefit to a small group of voters who will fight for its continuance while the cost is dispersed over the wider population who are not willing to organize over $6 a year each, and multiply it by thousands upon thousands of similar programs.
4.2.2009 12:29pm
mischief (mail):


That $12 million amounts to an increase of less than $6/yr per worker in the state.



Sure. And it's not your $6/yr, so it's no big deal.


And, of course, rejecting it is not a hint to Obama that he might want to watch what he tries to pull off, because attaching strings to money doesn't always get the results wanted.
4.2.2009 12:34pm
byomtov (mail):
Sure. And it's not your $6/yr, so it's no big deal.

It's not Jindal's either. Or yours. Neither is the $100 million. It's the unemployed or potentially unemployed LA workers'. How do you think they feel about it?
4.2.2009 1:00pm
Sagar:
It's the unemployed or potentially unemployed LA workers'.

you are joking, right?

[it is an obligation piled on the future taxpayers who will end up paying off the loans]
4.2.2009 1:14pm
gattsuru (mail) (www):
Can someone explain how this decision has any benefits for South Carolinians? Certainly it enhances Sanford's conservative credentials and ambition, but how does it help the actual constituents?


In addition to the issue with how the money is allocated (read the stimulus bill yourself, but my reading suggested), which suggests that states will likely be left holding at least part of the bill for various social programs, there are social consequences for taking the "free money". Increasing the duration for unemployment insurance, for example, is believed to have a non-trivial link to the duration of unemployment itself.
4.2.2009 1:17pm
Smallholder (mail) (www):
Hannibal Lector wrote:

I can only speak from personal experience: in my state slews of non-profits, manned almost entirely by Democrats, have already begun applying for the expected windfall of grant money. Most of it will be expended on extremely low-paying service jobs that are filled by un-skilled workers doing absolutely nothing for the economy.

Um, isn't the point of economic stimulus to create jobs so that those un-skilled worker types you disdain will go and spend their money, creating demand and getting us out of the liquidity trap?

Reagan and Thatcher were right about too much taxation harming the supply side of the economy. Unfortunately, the mantra of supply side economics seems to have caused amnesia about the other half of the economics see-saw: demand. Our current situation isn't due to short supply of capital. Businesses won't expand until demand increases - and demand won't increase until businesses expand and hire people who will then use their paychecks to demand goods from the rest of the economy.

So those unskilled workers, Hannibal, are going to do something for the economy: They're going to spend their paychecks.

In fact, one of the best ways to stimulate demand is to pump money into the lower section of the economy - low income families are much more likely to spend it.

You give me $1,000, I'm likely to pay down debt or stick it in a savings account. Give $1,000 to an unemployed guy, he'll likely spend it at Food Lion to feed his family.
4.2.2009 1:18pm
trad and anon (mail):
It's clear that the Republican strategy is to fight the President's recovery program tooth and nail so they can prolong and worsen the economic downturn. Then they can run against the Democrats on the grounds that the economy is bad. What Sanford is doing is just one piece of that.
4.2.2009 1:31pm
A Law Dawg:
It's clear that the Republican strategy is to fight the President's recovery program tooth and nail so they can prolong and worsen the economic downturn. Then they can run against the Democrats on the grounds that the economy is bad. What Sanford is doing is just one piece of that.


That doesn't make much sense. Sanford's action only affects South Carolina, and take it from a very recent native: South Carolina is not, NOT, going to be a blue state in 2012.
4.2.2009 1:34pm
eyesay:
geokstr: Dirksen was a Republican.
4.2.2009 1:44pm
PersonFromPorlock:
rosetta's stones:

The stimulus money is borrowed Chinese money, and SC voters are obligated to pay their share of that debt.

Not really. Anyone who loans money to a bankrupt spendthrift has no complaint when the borrower defaults. And at any rate, voters (SC or otherwise) aren't the borrowers, the out-of-control US government is.
4.2.2009 1:48pm
David M. Nieporent (www):
It's not Jindal's either. Or yours. Neither is the $100 million. It's the unemployed or potentially unemployed LA workers'. How do you think they feel about it?
I think that they probably would prefer to manage their own money rather than give it to the government. Why, what did you think?

(But I do think that "potentially unemployed" is an... unusual way to describe people who have jobs.)


The larger point is that every $12 million government program can be broken down into a small "per taxpayer" figure. But they add up.
4.2.2009 1:52pm
Thorley Winston (mail) (www):
Not really. Anyone who loans money to a bankrupt spendthrift has no complaint when the borrower defaults. And at any rate, voters (SC or otherwise) aren't the borrowers, the out-of-control US government is.


That’s only true is you expect the US government to default on the national debt, if it doesn’t then US taxpayers (which I suppose should be distinguished from US voters) are very much on the hook for the costs created by additional borrowing by their government.
4.2.2009 1:55pm
Simon Dodd (mail) (www):
LawMan 5000 said:
At the risk of sounding cynical, I think South Carolina, Louisiana and Alaska are making noises about turning down stimulus money because their governors have national political aspirations, not because they are afraid of getting "hooked" on revenue that they will expire.
Well, they say that there's no such thing as too much cynicism when it comes to politics, but even if you're right about the motivations of Sanford et al, ignoble motivations don't prove that a particular action is the wrong thing to do. If we were going to dismiss every action by a politician just because it was motivated by self-interest, wouldn't public choice theory direct that we dismiss every action by a politician, period? It seems to me that the issue of why Sanford is really turning down the money trails a long way behind more pressing questions such as whether it's a good idea to do so.
4.2.2009 2:01pm
Oren:

It seems to me that the issue of why Sanford is really turning down the money trails a long way behind more pressing questions such as whether it's a good idea to do so.

Damn straight!


That’s only true is you expect the US government to default on the national debt, if it doesn’t then US taxpayers (which I suppose should be distinguished from US voters) are very much on the hook for the costs created by additional borrowing by their government.

And if we do default on the debt, future Americans will pay much more for future borrowing or, worse, be denied access to credit entirely.
4.2.2009 2:04pm
Hannibal Lector:
Smallholder:
Um, isn't the point of economic stimulus to create jobs so that those un-skilled worker types you disdain will go and spend their money, creating demand and getting us out of the liquidity trap?
But what actually happens is that the "stimulus" funds require matching state payments which means increased state taxes which means money is taken from the productive private sector of the state economy [mostly working class and middle class folks doing real jobs] to pay for phony jobs held by political hacks. It's how Democrats buy voters but it doesn't really do much for the health of the economy.

And, by the way, I don't disdain un-skilled workers; just the politically-connected layabouts that always wind up getting these "jobs" and doing nothing useful for the dollars their political patrons obtain for them. Maybe you're lucky enough to live in a state that is not run by the Democrats or another political machine and have thus managed to avoid the spectacle.
4.2.2009 2:07pm
Steve P. (mail):
I must be missing something — why can't a state like Louisiana take the federal money, add to their unemployment insurance, and then pare it back when the money runs out? Even if the state is left holding part of the bill, isn't it a net gain for the citizens of that state to accept the money, at least economically?
It's clear that the Republican strategy is to fight the President's recovery program tooth and nail so they can prolong and worsen the economic downturn. Then they can run against the Democrats on the grounds that the economy is bad. What Sanford is doing is just one piece of that.

I think it's more likely that these specific governors don't believe the stimulus money is actually going to help the economy in the long term. That has the added political benefit of being able to say 'told you so' if it doesn't work. There's no doubt a political component to it, but the best way to get re-elected is to convince your constituents you're working in their best interest, and that's part of what Sanford is doing here.
4.2.2009 2:10pm
geokstr:

eyesay:
geokstr: Dirksen was a Republican.

Thanks for the correction. Memory is, fortunately, the first thing to go.

But in a way, since he was concerned about government spending, I should have suspected that anyway.

:-)
4.2.2009 2:11pm
Thorley Winston (mail) (www):
In addition to the issue with how the money is allocated (read the stimulus bill yourself, but my reading suggested), which suggests that states will likely be left holding at least part of the bill for various social programs, there are social consequences for taking the "free money". Increasing the duration for unemployment insurance, for example, is believed to have a non-trivial link to the duration of unemployment itself.


Part of the problem with the “free money” from the federal government is that many States are facing structural deficits because on how their programs are currently organized (e.g. standards for eligibility for benefits, benefit levels, dedicated revenue streams, etc.) and demographic changes and there long been a need to enact some major reforms to these programs (sort of like Medicare and Social Security but that’s a topic for another thread). One of the “strings” that has come with the “free money” is that the States are restricted from making some of those changes to these programs which means that they’re just continuing to put off fixing these problems to a future date when the problem becomes even worse than it already is.
4.2.2009 2:19pm
RPT (mail):
"Law Dawg:

That doesn't make much sense. Sanford's action only affects South Carolina, and take it from a very recent native: South Carolina is not, NOT, going to be a blue state in 2012."

Or, since most of the fund recipients are not going to be voting Republican why not turn down the money, while accepting federal funds directed to the benefit of the R constituencies. Isn't that another view to view it?
4.2.2009 2:26pm
Sagar:
trad and anon:
It's clear that the Republican strategy is to fight the President's recovery program tooth and nail so they can prolong and worsen the economic downturn. Then they can run against the Democrats on the grounds that the economy is bad.

if you swap "Republican" and "Democrat", won't it still be true?
4.2.2009 2:27pm
Thorley Winston (mail) (www):

I must be missing something — why can't a state like Louisiana take the federal money, add to their unemployment insurance, and then pare it back when the money runs out? Even if the state is left holding part of the bill, isn't it a net gain for the citizens of that state to accept the money, at least economically?


I think what you’re missing is that one of the conditions of taking money for unemployment insurance is that the States have to maintain their benefit levels and eligibility requirements at the same standards they had before. In other words, if the State is running a $300 million deficit in their unemployment insurance program and they take $100 million in federal funds, they can’t cut the program by $200 million (maybe by removing people from the rolls who shouldn’t have been eligible before or changing benefit levels) to put it in the black, they have to cut $200 million from the rest of their budget (or raise another $200 million in revenue) from areas that might be of a greater priority for that State.

I don’t know the specifics of Louisiana, South Carolina, or Alaska but I know that in my own State of Minnesota where we have earned the moniker of the “Welfare Magnet of the Midwest” because our benefits are more generous compared to our neighbors this was a serious consideration. Had our unemployment insurance system been running deficits like so many other States and had our governor decided that what we needed was to lower our benefit levels and/or change our eligibility standards (a lot of Obama’s former constituents get checks from the State of Minnesota), it’s possible that we might have done the same thing.
4.2.2009 2:28pm
PatHMV (mail) (www):
Law Man 5000 -- I was going to respond to your post, but my friend Simon Dodd responded quite well instead. Politicians always have questionable motives. Motives, being subjective and not easily proven, are always questionable. Therefore, the only real question that matters (except during election time when we are being asked to pick which of two candidates likely has the least bad motives) is the merits of the policy, not the motives of the political actors.

Also, wfjag is quite correct in his description of the structural tax and fiscal problems in Louisiana.

Look, here's what's going on in the "stimulus" b.s. Supposedly, the people of South Carolina want more tax money to pay for government programs. But the people of South Carolina won't elect politicians to state political office who are willing to raise taxes. But by routing the taxes through the federal government, the politicians know that the people of South Carolina have far less ability to actually vote out the culprits. Plus, there's always that argument that "if we don't take it, it'll go to other states, so we'll pay the taxes and get none of the benefits!" Why does this seem to make any rational sense to anybody?
4.2.2009 2:32pm
PC:
I can only speak from personal experience: in my state slews of non-profits, manned almost entirely by Democrats, have already begun applying for the expected windfall of grant money. Most of it will be expended on extremely low-paying service jobs that are filled by un-skilled workers doing absolutely nothing for the economy.

Huh. In my state I was passed the NIH "AMERICAN RECOVERY and REINVESTMENT ACT OF 2009 - CHALLENGE GRANT APPLICATIONS - Omnibus of Broad Challenge Areas and Specific Topics." (fed.gov has a weird issue with capitalization)

It features grants like: "Use computational data mining (artificial intelligence and natural language processing, among other techniques) of a large longitudinal medical records database to perform post-marketing surveillance (Phase 4 Clinical Trial)."

But I'm only speaking from personal experience.
4.2.2009 3:18pm
Sarah K. (mail):
Hannibal Lector: I was puzzled by your comment “Most of it will be expended on extremely low-paying service jobs that are filled by un-skilled workers doing absolutely nothing for the economy.” Presumably the theory is that the workers will buy things.

PatHMV, re: “The feds pay for these nice new roads. Well guess what... in a few years, those roads are going to need maintenance work.” I wasn’t aware that much of the stimulus was slated toward new projects and unnecessary new projects at that. We hear the phrase “crumbing infrastructure” for a reason: we got behind on maintaining what we have. (And most people agree that we do need roads, bridges. I’d add broadband cable...) I do hope there isn’t too much waste and projects are well chosen (i.e. few bridges to nowhere). There’s enough that needs to be done to spend the infrastructure money without that nonsense. My point: this isn’t (generally) just a case of building roads for the heck of it; I don’t think your comment purports with the facts.

And I have a serious question: Can Congress really constitutionally require a state to keep its benefits at a certain rate in perpetuity after it has stopped providing funding?

Finally, PatHMV: Re the your question about whether it makes rational sense to anybody that the people of S.C. want this money even though they don’t vote in locally politicians who raise their taxes. Maybe. I believe S.C. receives, compared to many other states, far more federal money than is in proportion with what its citizens pay in federal taxes. May change the relationship.
4.2.2009 3:43pm
PatHMV (mail) (www):
Sarah K.,

I was making a general example. I don't know the extent to which the "stimulus" bill spends money on new road construction rather than providing for greater maintenance work. If it requires mostly new construction, then it's a bad idea for states to accept it, for the reasons you (and I) give.

Congress likely can't require the state to keep the benefits at a certain level after the funding has run out. In fact, the Jindal Administration received clarification from the WH precisely to that effect. The state could expand the unemployment benefits for only 2 years. But is that really a wise thing to do? Even with such "sunset" provisions, it's really, really, REALLY hard to kill or cut back such programs. People grow accustomed to a certain benefit level, and when you tell them you want to cut it back, they tend to become irate. Upping the benefit level, even temporarily, enormously increases the odds that it will stay increased permanently, regardless of whether the feds actually mandate a permanent change.

According to the chart here, South Carolina is a net federal tax recipient, receiving about $1.35 in federal spending for every dollar paid in federal taxes, ranking it 16th among all the states (that's in 2005, no telling what it may be with this new garbage spending). That still means that $.74 cents of every federal dollar spent in South Carolina is coming from South Carolinans.
4.2.2009 3:58pm
Sarah K. (mail):
PatHMV,

Thanks for looking up the S.C. statistic; I should have done that to make the point. Thanks for taking up the slack on my laziness. I have no idea whether this would have much (or any) impact impact on S.C. voter aggregate behavior. I was raising the possibility that they might have different preferences vis a vis state and federal spending (hence my saying "maybe"). I find the question interesting but am not equipped to explore it.

Of course, you make the good practical point about the reality of reigning a program in (although it is slightly in tension with other arguments made here about what S.C. voters want). Thanks for pointing out the WH clarification: missed that one. I do think that the ability to end the "strings" is relevant. It certainly doesn't end the discussion (for the reasons you state among others), but I am surprised (and disappointed) that it does not appear more in the discussion weighing the costs and benefits of taking the moneys.

Finally, re the roads: If the question depends on the "if" as you now say, it's probably a good idea to find out the answer than to state one set of facts as if it is so. (As an aside, roads are probably a bad example of what you mean since most people agree that a functioning road system is necessary for the economy so you've then taken on the burden of proving that the projects are on the whole unnecessary. Other examples might get you closer to taking people where you want to go more easily.)
4.2.2009 4:45pm
Gabriel McCall (mail):
I'm puzzled about why the White House's opinion on this matter has any more relevance than, say, mine. Of the three branches of government, the last one I'd look to when in doubt on a question of law is the executive. The SCOTUS would be the ones to decide the issue if push came to shove... and (in theory) Congress should be able to explicate their intent if asked, but why should the President's opinion on this question matter in the least?
4.2.2009 4:46pm
PatHMV (mail) (www):
Gabriel... Well, one can only look to the courts by having a lawsuit. You can't just ask them for an advisory opinion. The money, having been appropriated, is in the hands of the executive branch. The executive branch will be reviewing the state's actions to determine whether they meet the qualifications imposed by statute. So at the moment it's the WH whose opinion matters most.

For example, on the unemployment issue, suppose Louisiana decided it did want to accept the money, but passed a law saying that the qualifications to receive unemployment benefits, which are currently X, would expand to Y beginning with the effective date of the stimulus bill and ending 2 years from that date, at which point the qualifications will revert to X. Does that adequately change the unemployment benefits criteria for purposes of determining eligibility to receive the additional funding? At this point, the only people to ask are the WH. One could, in theory, make that change and, if the feds refuse to pay over the money, sue the federal government for it. But in reality, that is unlikely to work. Among other things, when Congress vests any discretion in the executive, the courts are generally extremely deferential to the executive in his exercise of that discretion. If he says "Congress means this," that determination is very unlikely to be overturned, unless the Congressional language is directly opposite.
4.2.2009 4:54pm
Gabriel McCall (mail):
Thanks. That makes sense.
4.2.2009 5:06pm
byomtov (mail):
I think that they probably would prefer to manage their own money rather than give it to the government. Why, what did you think?

(But I do think that "potentially unemployed" is an... unusual way to describe people who have jobs.)


David,

It's an expansion of unemployment insurance. People who have jobs sometimes worry about being unemployed. People who buy fire insurance worry about their houses burning down. They are "potential fire victims." That's all I meant.

As to managing their own money, maybe you can point to privately available unemployment insurance that they could buy. I'm not aware of any, so maybe the choice is not so clearcut. To answer your qauestion, I think that some of the people affected probably would prefer to pay the extra six dollars for more unemployment insurance. May I suggest that neither one of us can know the breakdown for sure?

The larger point is that every $12 million government program can be broken down into a small "per taxpayer" figure. But they add up.

I broke it down "per worker" (not taxpayer) to point out that the additional payroll burden would be quite small. And if it was really onerous, I suspect the state could repeal the change anyway.

In short, I think Jindal's decision is foolish, and based more on his presidential hopes than on what is best for LA.
4.2.2009 5:28pm
A Law Dawg:
To answer your qauestion, I think that some of the people affected probably would prefer to pay the extra six dollars for more unemployment insurance. May I suggest that neither one of us can know the breakdown for sure?


The people to ask are employers, not workers, as employers are the ones who pay for unemployment insurance.
4.2.2009 5:38pm
trad and anon (mail):
if you swap "Republican" and "Democrat", won't it still be true?

No. The public has an irrational tendency to credit (or blame) the President's party for the state of the economy, whether it's true or not. Now Obama and the Democrats have to start claiming that his recovery program is working, whether it is or not, and the Republicans have to start arguing that it isn't, whether it is or not.
4.2.2009 5:41pm
wfjag:

Finally, re the roads: If the question depends on the "if" as you now say, it's probably a good idea to find out the answer than to state one set of facts as if it is so. (As an aside, roads are probably a bad example of what you mean since most people agree that a functioning road system is necessary for the economy so you've then taken on the burden of proving that the projects are on the whole unnecessary. Other examples might get you closer to taking people where you want to go more easily.)

Actually, Sarah, if you're looking at Louisiana, roads are a great example. When Huey Long was Governor, to get taxes raised, he got a small bond issue through to build a few hundred miles of roads. He had those roads built from the Parish seats a few miles out, so that farmers bringing their goods to market got to drive on roads the last few miles in and out of town. Long then proposed tax increases (which, among other things, would finance road construction -- which taxes were structured so that farmers and blue collar workers would not pay them), which taxes were voted in. (They also financed 2 state contruction contracts -- one that moved the state capitol exactly 3 feet north, and another that moved the state capitol exactly 3 feet south. Apparently both contracts were carried out exactly. They are in the State Archives. The taxes also financed building Tiger Stadium at LSU as a student dorm -- well, it does include some dorm rooms even today.).

Long's son, Russell, as U.S. Senator paraphrased and applied his father's taxation policy as "Don't tax you. Don't tax me. Tax that man behind that tree." He applied that policy for many years as a member of the Senate Appropriations Committee. (Today, Congress and the President don't believe in taxes -- everything is an "investment". Today, I guess LUS's Tiger Stadium, aka "Death Valley", would be called "an investment in education." A lot of teams have received an education there on how football should be played).

More recently, in Louisiana it is generally easy to tell which state Reps. and Senators are in and out of favor in Louisiana by the condition of the roads. Under Jindal it's not as obvious -- he's only been Gov. for 2 years, is a Republican following a Democrat, so maintenance or lack of it isn't quite as obvious. However, when Fast Eddie Edwards was Gov., particularly close to the end of his first two 4-year terms, going from one Parish to another would be a trip from driving on a modern highway -- complete with shoulders, striping and signs - to driving on something out of the third world. (Maybe "driving" is a misleading word when describing the process of avoiding potholes large enough to break an axle).

As I noted before, the La. Gov. has a line-item veto. Reps. and Senators who do the Gov.'s bidding are careful to separate the funding for their districts' projects from Reps. and Senators who are out of favor with the Gov. and his or her key supporters and contributors. Roads -- building and maintenance -- are very visible to the voters, and so a good example to use when discussing fiscal and tax policies of Louisiana state government.
4.2.2009 6:10pm
rosetta's stones:

"As to managing their own money, maybe you can point to privately available unemployment insurance that they could buy. I'm not aware of any..."


You can purchase unemployment insurance on just about any loan that I've come across: home, car, and even some credit cards.
4.2.2009 6:17pm
AndyinNc:

White House Backs Sanford on Stimulus

I think you misspelled the title, which should be "White House Calls Sanford's Bluff on Stimulus."
4.2.2009 6:35pm
byomtov (mail):
The people to ask are employers, not workers, as employers are the ones who pay for unemployment insurance.

Maybe the employess would take a $6 annual pay cut. In fact, employers would certainly not bear all the cost.

Funny. When conservatives start railing about Social Security they love to say that even the employer's portion really comes out of the employee's pocket. I guess that logic is suddenly inapplicable.

You can purchase unemployment insurance on just about any loan that I've come across: home, car, and even some credit cards.

Will it buy your groceries, or pay your rent? No.

And besides, one program is bound to be cheaper than paying for all these separate things, especially if it avoids the adverse selection problems that drive up the costs of the insurance you describe.
4.2.2009 6:36pm
ReaderY:
Note that Obama is described as taking a position that Congress could decide to redistribute the balance of state governmental powers if it wishes to, just that it merely has not done so in this one case.
4.2.2009 9:05pm
Anon21:
Sanford wins, South Carolina loses.
4.3.2009 2:01am
David M. Nieporent (www):
Will it buy your groceries, or pay your rent? No.
Well, true, but you can do it yourself with the money that you can get from unemployment insurance policies. They're not just limited to paying your mortgage if you lose your job.

Of course, churches and synagogues, fraternal societies, unions, etc. have offered it in the past -- they can avoid much of the moral hazard problem, because they have a local enforcement mechanism -- and still do, formally or informally.
4.3.2009 2:55am
AndyinNc:
Sanford's principled stand was so principled that it lasted almost all of the way until the deadline.

I guess Sanford finally realized that destroying his state's economy wasn't the best way to get the 2012 GOP nomination.
4.3.2009 3:17am
EPluribusMoney (mail):
And if we do default on the debt, future Americans will pay much more for future borrowing or, worse, be denied access to credit entirely.

We won't default, we'll inflate the debt away.

Remember 35¢ gas. It'll be $35 a gallon soon and we'll be making ten times the salary we are now. But house prices will only be 5 times as high.

Buy gold!
4.3.2009 9:25am
Real American (mail):
Sanford should push to offset all of the Porkulus money received with paying off state debt and cutting state taxes so it is as much a net push as possible.
4.3.2009 10:53am
Oren:


The people to ask are employers, not workers, as employers are the ones who pay for unemployment insurance.

There is no difference between those statements. Either my boss pays me $20/hour or he pays me $18.50/hr and 6% FICA.
4.3.2009 12:22pm
Oren:
Andy -- I'm laughing pretty hard now. All that and he folded anyway!

Free tip: If you are going to make a principled stand, decide in advance whether you have the cojones to stick it out or don't even try. Otherwise you look like a total tool.
4.3.2009 12:23pm
Mineshaft:
Sanford hasn't 'folded'. He never said he wouldn't take the lion's share of the stimulus, and he's still not going to take the $700 million that demands he change SC's unemployment compensation laws.
4.3.2009 4:08pm
Sarah K. (mail):
wfjag, I believe you get to the graft point more than anything else. But then it seems the graft problem should be attacked, and that's a little far from the original point being made. I don't know much about the "infrastructure bank" proposals out there, but it seems like a decent idea in theory. Efficient and uncorrupt government would be nice regardless of what one thinks the proper size and role of it should be.
4.3.2009 4:30pm

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