here since states cannot offset their budget gaps with deficit spending the

Here since states cannot offset their budget gaps

This preview shows page 77 - 79 out of 88 pages.

here: since states cannot offset their budget gaps with deficit spending, the only countercyclical game in town is the federal gov’t. The state fiscal relief in the Recovery Act was fast-acting, effective stimulus, helping to retain needed jobs in communities, like teachers, cops, firefighters, sanitation workers, etc. As the stimulus has faded, layoffs have accelerated. The counterplan forces spending cuts – balanced budget requirements require offsets Reuters, 12 (6-7-12, ) Because all states except Vermont must end their fiscal years with balanced budgets , lawmakers rushed to cut spending , temporarily raise taxes and tap the federal government for help. Revenues have now grown for nine consecutive quarters, but the growth has slowed in the last three. That leaves state lawmakers worried they will not recover fast enough to cover high demand for services such as healthcare and the hole left by dwindling federal aid. As emergency tax hikes expire, states are also worried they will not be able to address possible economic threats like a spike in unemployment or the crisis in Europe. State spending for the plan requires concurrent cuts that crush the stimulative effect Oliff, Mai, and Palacios, 6-27- 12 (Phil Oliff, Policy Analyst with the State Fiscal Project, Chris Mai, Research Assistant with the State Fiscal Project, and Vincent Palacios, Research Associate for the State Fiscal Project, June 27, 2012, ) Consequently, even though the revenue outlook is trending upward, states have addressed large budget shortfalls by historical standards as they considered budgets for 2013. The vast majority of these shortfalls have been closed through spending cuts and other measures in order to meet balanced-budget requirements . As of publication all but five states have enacted their budgets, and those five will do so soon. To the extent these shortfalls are being closed with spending cuts, they are occurring on top of past years’ deep cuts in critical public services like education, health care, and human services. The additional cuts mean that state budgets will continue to be a drag on the national economy, threatening hundreds of thousands of private- and public-sector jobs, reducing the job creation that otherwise would be expected to occur . Potential strategies for lessening the impact of deep spending cuts include more use of state reserve funds in states that have reserves, more revenue through tax-law changes, and a greater role for the federal government.
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The counterplan kills the economy. It requires concurrent spending cuts or raising taxes, which crush growth Oliff, Mai, and Palacios, 6-27- 12 (Phil Oliff, Policy Analyst with the State Fiscal Project, Chris Mai, Research Assistant with the State Fiscal Project, and Vincent Palacios, Research Associate for the State Fiscal Project, June 27, 2012, ) Spending cuts are problematic during a n economic downturn
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