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Parade Of The Insolvent State Governments
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By fgrace on February 18th, 2009
California state lawmakers wound up on center stage (above, the state capitol in Sacramento), but deficit dramas are now unfolding in all but eleven states.
California Gov. Arnold Schwarzenegger, often called The Governator in a good-natured reference to his acting credentials, is looking a lot more like The Terminator to the as many as 20,000 state workers whose jobs may go up in smoke due to budget cuts reflecting California's share of the pain of the national economic crisis. But with the state swimming in nearly $42 billion in red ink, that label may not be fair. It's clear that something's got to give – the ongoing debate being exactly what should be cut, and whose taxes should or should not go up.
While California's dilemma is dramatic, it is not as unique as one would hope. CNN lays out the grim statistics in an interactive map showing state government deficits ranging from the millions and hundreds of millions to double digit billions – with only 11 states in the black, amid concerns running the gamut from unemployment benefits and health care costs to meeting payrolls. State workers in Colorado are facing the prospect of unpaid time off, proposed budget cuts in Washington state have sparked protests, the airwaves in New York are full of ads denouncing proposed changes in health care spending, and the governor of Kansas – which had briefly suspended tax refunds – has resolved a standoff by signing a bill to balance the budget.
At the federal level, budget deficits caused considerable debate in Congress while enacting the just-signed economic stimulus package and examining the mortgage crisis and the auto industry, sparking a blizzard of jokes on late night television. But among the public, there's no evidence yet of a consensus on what to do about the escalating national debt and the government's long-term budget problems - a problem President Obama and many economists have said must be addressed - but not until after the economy is in better shape.
A Gallup poll released Tuesday shows that with eight out of ten Americans believing the economy is getting worse, 59 percent think Congress was right to pass the $787 billion economic stimulus bill. Asked to name the nation's most important problem, 79 percent mentioned some kind of economic concern, a jump from about 40 percent in early 2008 and less than 20 percent at the beginning of 2007.
When getting into specifics, however, the numbers break like this: 57 percent said the economy in general is the nation's most important problem, 11 percent said unemployment, 8 percent said lack of money, 3 percent said inflation, and just 2 percent pointed to the federal budget deficit or national debt.
The fact that there is some awareness of the dangers of deficits may account for an interesting development in response to the economic stimulus package: rumblings from some GOP governors about not accepting all of the money that's available. We'll certainly be keeping an eye out to see if anyone really does leave any money on the table.
For more on the economy, the federal budget deficit – expected to be about $1.2 trillion this year – and the $1.3 trillion national debt (click here to see the roster of nations we owe), check out our Citizen's Survival Kit guide to Taxes, Spending & Debt. And for more on the impact of this problem and what we can do about it, check out FacingUp.org, our site dedicated to action on this issue.
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»A new report finds the main problem in getting the public to deal with our fiscal problems isn't opposition to tax increases or spending cuts -- it's their lack of trust in the government to spend their money wisely.