Barack Obama has tried to take credit for saving or creating two million jobs through the intervention of Porkulus last year. Most of the jobs “saved” came from block grants given to states, which used the money to paper over budget gaps instead of rationally examining bloated budgets and looking for opportunities to make cuts. States declared that they saved positions in law enforcement and education with their Porkulus money that were never at risk in the first place rather than the untouched bureaucracies that should have first come under the knife.
In 2010, those supposedly “saved” jobs are back in trouble again, just as I predicted:
Federal stimulus money has helped avoid drastic cuts at public schools in most parts of the nation, at least so far. But with the federal money running out, many of the nation’s schools are approaching what officials are calling a “funding cliff.”
Congress included about $100 billion for education in the stimulus law last year to cushion the recession’s impact on schools and to help fuel an economic recovery. New studies show that many states will spend all or nearly all that is left between now and the end of this school term.
With state and local tax revenues still in decline, the end of the federal money will leave big holes in education budgets from Massachusetts and Florida to California and Washington, experts said.
“States are going to face a huge problem because they’ll have to find some way to replace these billions, either with cuts to their K-12 systems or by finding alternative revenues,” said Bruce Baker, an education professor at Rutgers University.
The Porkulus money was directed at education systems, but all that did was allow states to allocate their own resources to other entities. If the states want to save education jobs in the absence of another federal windfall, they will need to look at other programs to reduce or eliminate altogether. American families have had to tighten their belts in a similar manner, but states mainly avoided it in 2009.
In this case, the states got warned up front not to spend all of their money in the current fiscal year. Some states held a significant amount in reserve, but some did not, especially the states noted above. They blew it all in one year as a way to avoid the politically dangerous decisions to cut services in other areas, and now face the same level of funding crisis that they did last year.
As a study in jobs “saved or created,” it shows the temporary and self-defeating nature of state bailouts. The money didn’t save anything except politicians from making tough decisions. Some states managed to kick the can down the road two years instead of one, but in the end, all of the states will have to face the same problem. We need to cut off the federal bailouts to force states to allocate resources responsibly and to rethink their revenue sources, especially in California, whose progressive income tax structure leaves it particularly vulnerable to the kind of economic volatility we have seen the past two years.