Thursday, July 8, 2010

An Increase in Spending Disguised as an Advance

Brad DeLong thinks this makes sense:
Congress should pass legislation that would allow a state to simply get an “advance” on these future federal dollars expected from entitlement programs. The advance could then be used for regional stimulus, to continue state services and to hasten our recovery. The Treasury Department, which writes the checks to the states, could be assured of repayment (with interest) by simply cutting the federal matching rate by the needed amount over, say, five years. Of course, when Treasury eventually collected what it was owed, the state would have to cut spending or find new revenue sources. But that would happen after the recession, when both tasks would likely prove easier economically and politically.
His blog is called Grasping Reality with Both Hands, but in this instance his reach definitely exceeds his grasp.  This is little more than a recipe for perpetual bailouts until the point of exhaustion.

Kelly Jane Torrance at @TAC:
The Milkwaukee school board offered to avoid layoffs if it could spend less on healthcare by requiring co-pays of its employees—a healthcare cost with which virtually everyone in the private sector is familiar. But the union refused. Moore asks, Why did the union prefer to let hundreds of its members get laid off instead of accepting a compromise?
The Milwaukee Teachers Education Association was immovable on benefits in part because it placed a bet on its Democratic friends in Washington rushing to the rescue. “The problem must be addressed with a national solution, a federal stimulus package that will restore educator positions,” Pat Omar, the union’s executive director said in June

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