Stimulus helps fill coffers for states

[TomCADem]

Source: USA Today

A historic nosedive in state tax collections extended into the third quarter of the year, and only an infusion of federal stimulus money has averted widespread program cuts and worker layoffs.

Tax collections from July through September dropped an average of 8.3% from a year earlier in the eight states that release up-to-date monthly tax figures, a USA TODAY survey found. New York's tax collections fell 8.9%, despite an income tax hike earlier this year. States reporting partial third-quarter results showed a similar downward spiral in tax collections, including 13.2% drop in Arizona.

Federal stimulus money has protected states from making big cuts in the number of government workers, in aid to schools or in spending on Medicaid, the health care program for the poor. But most federal stimulus money ends in December 2010.

The result is a potential financial cliff for states. "It's hard to imagine what happens when stimulus money runs out," says Craig Thiel, a budget expert at the non-partisan Citizens Research Council of Michigan.

Read more: http://www.usatoday.com/news/nation/2009-10-28-states-woes_N.htm

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I think federal aid to states has been the biggest positive benefit from the stimulus. Without such aid, even more state and local employees would be laid off, and even more state benefits would have been slashed.

[AllentownJake]

1. There is still a hole

it is being filled right now, but unless unemployment decreases significantly by the end of 2010 the hole will still be there.

[girl gone mad]

2. At some point, the party will have to come to an end.

"The result is a potential financial cliff for states. "It's hard to imagine what happens when stimulus money runs out," says Craig Thiel, a budget expert at the non-partisan Citizens Research Council of Michigan."

[TomCADem]

3. Our Economy Needs To Fundamentally Change

I don't mean our economic system, but what is the driver of wealth in our economy. Sixteen percent of our GDP goes to health care. A lot of wealth is tied up in our financial sector. Much of our manufacturing has been out-sourced to China creating a symbiotic relationship that is hazardous for both parties.

Will there be a real technological advance that spurs a great deal of economic growth? I am not talking about artificial ponzi-like paper wealth that is unrelated to any actual product, but a new product that actually affects people's lives on a day to day basis like cars, appliances, and the internet. Of course, I don't know what it is, because if I did, I would not tell anyone, but would invest in that thing like a mad man.

I could begin another rant attacking the U.S. Chamber of Commerce as an enemy of innovation, since it opposes health care reform, which would benefit small businesses, and climate change legislation, which could finally help move of us off dependence on foreign oil, but I will leave that for another post.