States of Pain

Source: Chris Maisano, In These Times, January 22, 2010

Last September, Federal Reserve Chairman Ben Bernanke declared, “From a technical perspective, the recession is very likely over.” But he also acknowledged that the damage wrought by the economic downturn would result in additional pain for a long time to come. Nowhere else is this more apparent than in the slow-motion catastrophe unfolding in state legislatures across the nation, where dwindling tax receipts are forcing many states to confront massive budget deficits that threaten to undermine crucial public services and the fragile economic recovery now underway. According to recent reports by the Center for Budget and Policy Priorities (CBPP), the states can expect to experience a combined budget deficit of $350 billion for fiscal years 2010 and 2011. Even though the broad economic picture is improving, the CBPP expects that fiscal year 2011, which begins in July 2010, will be even worse. The fiscal assistance that states received from Washington under President Obama’s stimulus package is scheduled to end on December 31, 2010. In the absence of further relief, states would be forced to make painful budget cuts that the CBPP estimates “will take nearly a full percentage point off the Gross Domestic Product” and “cost the economy 900,000 jobs.”…

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