The federal government with the help of the Federal Reserve has unlimited power to print money. Just ask chairman Bernanke who pledged $11.2 trillion dollars to bail out a handful of bankers.
Then Congress pitched in with more stimulus money, which was intended mainly to create new jobs. However, states gobbled up a good portion to plug their budget deficits. Now that stimulus money has been used up. Unlike the federal government, state governments cannot print extra money to cover their shortfalls. They must balance their budgets.
With the stimulus money gone, states are faced with an estimated $90 billion deficit. That can only be plugged with sharp cuts in services.
One key area where extra monies are critical is the Medicaid program. States have used up their Medicaid money and are looking to Congress to get more. So far Congress has passed a $25 billion extension of Medicaid. It is being held up by the need to find where the money is coming from. States have already put the funds in their next year's budgets.
Another area which is scheduled for drastic cuts is education. Estimates are that 275,000 education jobs will be cut.
Let's step away and look at what happened during the financial meltdown. Bernanke had no qualms pledging and/or printing $11.2 trillion dollars to bail out the bankers. He did nothing to help the 16.9% of Americans thrown out of their jobs because of the excess greed and speculation on Wall Street. Even now, Congress wants to end the 99 week unemployment benefits. This would create a new class of homeless persons in America.
Should the federal government help out the states?