Yesterday GAO released its annual report on the fiscal outlook for state and local governments and the news is not good. GAO found that that the short-term outlook is better in March 2010 than it was just a short year ago, primarily due to the Recovery Act federal grants to states. But the continuing effects of the recession on state revenues and expenditures will continue the pressure on their near-term budgets. GAO estimates that these governments face operating deficits of nearly $164 billion for 2010 and 2011. The National Council of State Legislatures and the National Governors’ Association/National Association of State Budget Officers reports issued late last year project that those deficits will continue well into 2012.
In addition, the states also face severe long-term fiscal imbalances that have little to do with the current economic downturn. In the past, according to GAO, states have mainly been able, except during periods of recession, to maintain a fiscal balance where their costs and their revenue matched. However, GAO projects “that the fiscal position of the sector will steadily decline through 2060 absent any policy changes.” And the cause? The growth in health care costs, the same driver of many fiscal problems at the federal level over the coming years. Approximately 21 percent of state spending is on Medicaid -- the joint state/federal health program for low income individuals -- and although the federal government increased its share of the joint costs as a part of the Recovery Act, the long-term implications of increases in Medicaid costs on state spending are enormous.
The choices that the states face to meet their long-term fiscal gap will be difficult. GAO estimates that in order to maintain a fiscal balance, states will need to decrease their expenditures this year and every future year by a 12.3 percent reduction in expenditures (or an equivalent increase in revenues). The fights we saw in California last summer are only the beginning of a nationwide battle in the state legislatures to address a looming fiscal crisis. And as the states struggle to meet their fiscal goals, states are likely to turn the federal government for help, particularly in the Medicaid program.
Big Bureaucracy
Let's have a hypothetical. If an industry is running hyperinflation (high, out of control inflation) - what is the best thing to do to stop it? Let's forget it is the health care. What is the economist's best prescription on stopping hyperinflation in one hypothetical not-specified industry?
Greetings! Ellie from http://www.bigbureaucracy.com/
Why do we give Medicaid and SSI to those not US. Citizens?
I worked for the State of Washington DSHS (Welfare) for 11 1/2 years, so I know what I'm talking about here. I did SSI-related medical cases, (lots of them) and here's what usually happens:
World Relief helps Russians, Bosnians, and other Europeans enter the US. They set up appointments for them at the Social Security Offices and for their welfare money before their plane even lands. At the interview, they say nothing (they don't speak english), and the interpreters that we are paying $25.00 per hour don't even bother to repeat the question to the interviewee. When you ask "do you have any stocks, bonds, cash on hand, bank accts, or other assets", the interpreter says "no". He never asks the interviewee. When you ask why they came to this country, the interpreter says "he (or she) came here to RETIRE! No, I'm not lying. So, states have no money for medicaid and Social Security is broke? WOW!! Big surprise there! Why hasn't anybody ANYWHERE stopped these people from entering this country without even paying one penny into our economy, and allow them to immediately start collecting free medical with a zero co-pay, a check for $600.00 (or more) per month, plus food stamps, until they die? Why are we doing this? IT'S INSANE!
While I'm at it, I feel sorry for Chili and Haiti, but where in the hell did we get the millions and millions of dollars we are sending to them? Aren't we broke? If we have no money to help our own citizens, why do we magically have it to help others? Are we actually borrowing money from China to help other countries now? Why hasn't anybody asked where this money is coming from? Almost 1 million homes got forclosed on in 2009. At 3 people per home, we now have 3 Million homeless people in this country. Why do we have money to build homes for Haitians, but not for Americans?
Thanks for listening,
Amy<a href="http://www.howlersandyowlers.com> (My Website) </a>
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