House Passes State Aid Bill, Saving An Estimated 300,000 Jobs

Created: August 10, 2010 15:09 | Last updated: July 31, 2020 00:00

Schools 0810 480x341 A teacher protests budget cuts and lay-offs. (San Gabriel Valley Tribune/ZUMAPRESS.com)

This afternoon, the House, reconvened for a special emergency vote, passed a $26.1 billion bill providing aid to cash-strapped state governments. The bill provides $16.1 billion in Medicaid funding and $10 billion to help states keep teachers on the payroll.

[Congress1] The Senate passed the deficit-neutral bill last week, 61 to 39. The vote came down on party lines, save for Maine Republicans Olympia Snowe and Susan Collins. After the Senate passed the package, Rep. Nancy Pelosi (D-Calif.), the Speaker of the House, called members back from their home districts for a special vote on the bill. More than 400 House members returned, and Democrats passed a rule on the measure, 229 to 173. The bill passed 247 to 161, mostly on party lines. Republican Reps. Anh “Joseph” Cao (La.) and Mike Castle (Del.) voted for the bill; Democratic Reps. Gene Taylor (Miss.), Bobby Bright (Ala.) and Jim Cooper (Tenn.) voted no.

Democrats interrupted the August recess, citing the bill as an urgent priority, because more than 30 states had figured the funds into their budgets. If Congress failed to pass the funding, or did not pass it until mid-September, after recess, states might have laid off hundreds of thousands of workers. All states except for Vermont are required to pass balanced budgets. The recession has caused a steep decline in tax revenue, and increased expenditures on programs like food stamps, unemployment insurance and Medicaid. That has led to combined state budget shortfalls that could reach $140 billion for the current budget year, according to the Center for Budget and Policy Priorities.

“We balanced our budget” planning for the Medicaid extension, Gov. Bill Ritter (D-Colo.) told TWI. “And we believed in our legislature there would be that extension in place. Now, we’re down to the last hour. Our fiscal year started July 1. If this [legislation] does not happen in the next few days, it’s likely I’ll have to present … $200 million in cuts immediately.”

He added: “I’ll tell you where those cuts will come from. Public safety, we don’t want to cut that. Human services, prisons, health care, those are caseload-driven. So we [are left with] higher education, which has already been cut, and K-12 [which we don’t want to cut]. That’s the likelihood.”

President Obama urged Congressional Democrats to pass the bill, which he plans to sign into law as soon as possible. Flanked by two teachers facing layoffs in the Rose Garden this morning, Obama said, “We can’t stand by and do nothing while the pink slips are given to men and women who educate our children or keep our communities safe.”

He also responded to Republican criticism of the bill. House Minority Leader John Boehner (Ohio) had blasted it as a “bailout” and a gift for special interests. “This taxpayer bailout was a direct order from Washington unions to Democratic leaders,” Boehner said in a statement today. “Instead of listening to the American people who are asking Congress to focus on creating jobs and cutting spending, Democrats are carrying water for their union allies in Washington. The American people want us to end the bailouts. Republicans are listening, through our America Speaking Out project, and offering better solutions.”

Obama countered, “I suppose if America’s children and the safety of our communities are your special interests, then it is a special interest bill.”

The House estimates that the bill will save approximately 161,000 jobs by providing states funding for teachers’ salaries. And the Economic Policy Institute estimates that the Medicaid funding will save a further 158,000 jobs. (States might not have cut Medicaid, which offers health care coverage to impoverished Americans. But they would have made up the shortfall by firing other workers, like firefighters, and cutting contracts, leading to job losses in the private sector.) Even with the funds — less than half of what the White House requested just a few months ago — local governments will likely still shed jobs in the coming year. Last month alone, states cut 48,000 payroll positions.

Republicans on the Ways and Means Committee countered that the tax hikes contained in the bill would cause the economy to shed an additional 141,000 jobs.

To pay for the bill — Republicans refused to cross the aisle unless the bill was entirely deficit-neutral — the Senate resorted to some controversial cuts. It closed a tax loophole for companies shipping jobs overseas, saving $9 billion. It also rescinded unspent funds from a variety of programs. Then, most controversially, it took $12 billion from future Supplemental Nutrition Assistance Program, or food stamps, funding. Senate aides stress that the cut does not cut the benefits authorized in the most recent Farm Bill. It takes from expanded benefits created in the $787 billion American Recovery and Reinvestment Act, the Feb. 2009 stimulus.

But the cut means that for the first time ever food stamps might have a “cliff”: Families will receive a smaller check in April 2014 than they received in March 2014. A family of four might see their benefits decline by $60 a month. Policy analysts specializing in hunger and nutrition described the cut as “devastating.”

Some House Democrats have expressed disappointment or even anger with the cut to SNAP. Rep. Dave Obey (D-Wis.), the head of the House Appropriations Committee, said the White House proposed the offset to him in the spring. “Their line of argument was, well, the cost of food relative to what we thought it would be has come down, so people on food stamps are getting a pretty good deal in comparison to what we thought they were going to get,” he said in an interview with the Fiscal Times. “Well isn’t that nice. Some poor bastard is going to get a break for a change.”

And Rep. Rosa DeLauro (D-Conn.) has spoken out against the cut to SNAP. “This is a bitter pill to swallow,” DeLauro told The Hill. “I fought very hard for the food assistance money in the Recovery Act and the fact is that participation in the food stamps program has jumped dramatically with the economic crisis, from 31.1 million persons to 38.2 million just in one year.” DeLauro said she will attempt to restore the SNAP funds, though she has not specified how.

*Note: This article has been updated in the second paragraph to reflect the final vote. *