Keep State's Woes From Dragging Down Economy

Ariz., Fla., Ill., Mich., and NJ among others facing crises

(NEWSER) - California has by no means cornered the market on enormous financial problems at the state level, with a report out today saying Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island, and Wisconsin are also at tremendous risk. The Pew Center sees widespread unemployment, huge budget deficits, and the ongoing foreclosure crisis as common factors—plus various constraints that keep many of the states from raising taxes. More»

(AP) - Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time. The imbalance is intensifying fears about higher interest rates and inflation; there's also concern about trying to reverse the deficit—by reducing government spending or raising taxes—in the midst of a harsh recession. The Treasury Department said today that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to nearly $1.1 trillion. More»

Critics say another crisis looms

(NEWSER) - California's budget fight is officially over. For now. Arnold Schwarzenegger signed into law yesterday a budget package that closes the state's $41 billion shortfall, but not before making $1 billion in line-item trims. The governor cut personnel budgets for state officials by 10%, $400 million in prison funding, and $510 million from higher ed. He plans to replace the education money with federal stimulus funds, reports the San Francisco Chronicle. The bill also includes $12.5 billion in tax increases. More»

Senate version provides for half as much direct state aid

(NEWSER) - With the House and Senate reconciling their competing stimulus bills, governors are pushing for the House version to prevail, the Washington Post reports. States would receive billions in aid if that version goes through—or next to nothing if the Senate's legislation passes. "If the Senate version holds, there will be very deep cuts," said Wisconsin governor Jim Doyle. More»

We need massive fiscal expansion, not budget restraint: Krugman

(NEWSER) - As the incoming administration prepares a massive fiscal stimulus to jolt America's floundering economy back to life, some are worrying about what billions in spending will do to the budget deficit. On the contrary, writes Paul Krugman in the New York Times: Deficit spending now will help, not harm, the country's long-term prospects, and worrying about the deficit during a crisis is both misguided and dangerous. More»