States May Bear Brunt of New Imperialism Costs

[Yo_Mama_Been_Loggin]

Or is it "New Fedralism" at its finest.

May 12 (Bloomberg) -- What does the occupation of Iraq in particular and nation-building in general have to do with state and local finance?

More than you might think, if you read Niall Ferguson's new book, ``Colossus: The Price of America's Empire,'' just published by Penguin Press.

Ferguson, a Scottish historian by way of Oxford, who is now on his way to Harvard, says there is a very good argument to be made for a new imperialism, and the U.S. is the best candidate for the job. ``Colossus'' looks like required summer reading at 1600 Pennsylvania Avenue.

That means states and localities will be paying more of their own bills. This is hardly welcome news for states, which earlier this month said Medicaid alone, now 21 percent of all state spending, was eating up more of their budgets.

States pay just over 40 percent of Medicaid, which provides medical care for the poor. The federal government pays all the costs for Medicare, which covers the elderly and disabled. In 2002, Medicare cost $267 billion, Medicaid $250 billion, with the states paying $103 billion, according to the Centers for Medicare and Medicaid Services.

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