The Check is in the Mail

States are having trouble making ends meet and a lot of that is due to mandates from Washington. Funding for expanded SCHIP and Medicaid was supposed to come (at least in part) from D.C., but it seems the folks in Washington are finally realizing they have already spent the money given to us by the Chinese and the corner loan shark is not willing to float them money.

On top of it all, Obama is threatening to kick some B.P. butt and Helen Thomas is off visiting some of her Jewish friends in Palestine.

And now this.

The New York Times reports that at least 30 states are in the hole for Medicaid unless Congress sends them more money. What most folks may not know is the party is about to end. All that is left now is for our children and grandchildren to empty the ashtrays and pick up the left over beer bottles from the Obama celebration of letting the good times roll on someone else’s dime.

COBRA subsidies, funding for Medicaid and SCHIP was paid for with checks kited from Washington. Most states figured they didn’t have to pare back or raise taxes as long as Obamabucks were flowing.

Unless Congress approves more Medicaid spending, which at this point seems unlikely, the states are going to have some serious funding problems. Some of our Congress critters have taken off their party hats and are threatening to sit on their hands should new votes come up for spending bills. This applies to folks with a “D” as well as those with an “R” after their name. The voter revolt is becoming quite vocal over all the spending and heads are already rolling with more to follow.

Gov. Edward G. Rendell of Pennsylvania, for instance, penciled $850 million in federal Medicaid assistance into the revenue side of his state’s ledger, reducing its projected shortfall to $1.2 billion. The only way to compensate for the loss, he said in an interview, would be to lay off at least 20,000 government workers, including teachers and police officers, at a time when the state is starting to add jobs.

“It would actually kill everything the stimulus has done,” said Mr. Rendell, a Democrat. “It would be enormously destructive.”

Yes, “stimulus” really has a nice ring to it until the voters realize that (1) it isn’t working and (2) eventually someone will have to pay for this mess. Jobs created or saved sounds good until you realize that 95% of the new jobs were part time Census workers. Toto has pulled back the curtain to reveal the Wizard is a fake.

The Medicaid provision, which would extend assistance first granted in last year’s stimulus package, was considered such a sure bet by many governors and legislative leaders that they prematurely included the money in their budgeting. But under pressure from conservative Democrats to rein in deficit spending, House leaders in late May eliminated $24 billion in aid to states from a tax and jobs bill that was approved and forwarded to the Senate.

This is called betting on the come. If you know your opponent it can work to your advantage in poker, but it doesn’t work so well when the bank is busted and the folks you are playing against decide to call it a night.

Although the federal Medicaid share varies by state, the stimulus act raised it to an average of 66 percent, from 57 percent, according to the Kaiser Family Foundation.

The reimbursement increase was limited to a 27-month period that ends on Dec. 31. Almost as soon as it took effect, governors began fretting about the fiscal precipice they would face when the enhanced payments ended. In February, governors from 42 states and several territories signed a letter to Congressional leaders pleading for a six-month extension.

But with the public alarmed about deficit spending, House leaders found that they could not muster the Democratic votes needed to pass the tax and jobs bill without jettisoning several expensive components.

So what happens now?

Seems that in addition to folks in DC worrying about getting laid off the same fate might await those at the state level. This is not a good year to be an incumbent.

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