Even though we’ve seen improvement in the overall economy, the economic recovery will be long and painful. The latest unemployment numbers showed a jump in unemployment to 9.4% (U3) and the economy still lost >300,000 jobs last week. There’s been talk in some places of a second stimulus package because the first was not large enough. One of the most painful cuts from the Republican 3 (Snowe, Collins and Specter) was the cut of aid to states and we can see that has consequences for Delaware. Economist Brad DeLong has a proposal for a second stimulus package.
I therefore believe:
That it is past time for you to seek from the Congress for authority to guarantee the debt of states that, in response to the current recession, (a) seek to conduct their own state-level fiscal expansions, and (b) devise plans and strategies for the long-term repayment of the debt the federal government guarantees that the Secretary of the Treasury certifies as prudent and sustainable. That it is time for you to seek from the Congress an amended Budget Resolution: to include in this year’s forthcoming Reconciliation process an additional $500 billion of federal aid to states, distributed per capita and conditioned on their maintaining effort at the provision of public services–on their not repeating the mistake of Herbert Hoover of cutting government employment and spending in a downturn.
I think this is an intriguing idea and could help Delaware avoid painful cuts while it gets its fiscal house in order.