Republican Governors Step Up Attacks On Obama Economic Plans
Obamas “short-term” thinking and deficit spending are “digging yet another hole for ourselves,” said South Carolina Governor Mark Sanford, a Republican, on “Fox News Sunday.” He said he may not accept all of the $8 billion in stimulus money designated for his state. Democrats criticized that approach as insensitive.
“This is about real people who, through no fault of their own, are laid off because of a recession, and they need to be able to put food on the table,” said Democratic Governor Jennifer Granholm of Michigan, which has a 10.6 percent unemployment rate, the nations highest. Granholm said she would accept all the stimulus money and be “first in line” to “take their dollars too” if South Carolina leaves funds unspent.
The Republican criticism may be a preview of partisan battles later this week when Obama is scheduled to release an outline of his 2010 spending plan. The president plans to cut the federal deficit to $533 billion by 2013 with higher taxes on the wealthiest Americans and an end to the war in Iraq, according to an administration official.
Minnesota Governor Tim Pawlenty, a Republican, said investors wont take kindly to Obamas tax policies.
Market Reaction
“Wait til you see the markets reaction to what he unveils later this week, which is increasing taxes in the middle of a deep, deep recession,” Pawlenty said on “Fox News Sunday.” “If you believe theyre going to take seriously the idea of cutting down the deficit when they are exploding spending at a historic pace, Ive got some hunting land for you in northern Minnesota.”
Pennsylvanias Democratic Governor Edward Rendell said a tax increase wont hurt.
“We heard these same arguments when Bill Clinton raised taxes on the top 2 percent of the richest people in America to get rid of the deficit,” he said. “And guess what happened? We produced 24 million new jobs. We had the eight years that were the most successful in the second half economically of the 20th century.”
Republican Governor Bobby Jindal of Louisiana, appearing on NBCs “Meet the Press,” said he is rejecting $100 million in unemployment assistance in the stimulus plan because it would force the state to raise business taxes to pay for the extra aid once the federal dollars run out.
“It requires us to make a permanent change in our law,” he said. “Its like spending a dollar to get a dime.”
Falling Tax Revenue
“States have a cumulative deficit that is more than double the money we get,” Rendell said. “Theres not a state in this union thats going to be able to wipe away all its problems.”
The economic crisis dominated talk at the National Governors Associations annual winter meeting in Washington this weekend. The Dow Jones Industrial Average hit its lowest level since 1997 last week. Government reports showed industrial output sank in January for a sixth time in seven months and housing starts plunged 17 percent.
Companies from General Motors Corp. to Alcoa Inc. are slashing jobs and cutting production as the recession threatens to become the worst slump in the postwar era.
Pennsylvanias Woes
Pennsylvania cut $1 billion from its budget and raised $218 million in additional revenue with taxes on tobacco and other products, said Rendell, chairman of the governors group. The stimulus, even with about $100 billion in infrastructure spending for states, is no cure-all, he said.
The economic meltdown continues to take its toll: 43 U.S. states report the need for additional spending cuts or tax increases before their current budget years end, the Denver-based National Conference of State Legislatures reports. Thirty-four states face widening budget gaps as they prepare spending plans for the 2009-10 fiscal years.
The request of U.S. carmakers for as much as $21.6 billion in new loans on top of $17.4 billion in aid already provided by President George W. Bush sparked renewed debate today. Senate Minority Leader Mitch McConnell, Republican of Kentucky, said the reorganization proposals from GM and Chrysler LLC are inadequate.
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