Wednesday, December 03, 2008

More on Why Aid to the States Makes Sense

The News Journal reports that Jack Markell had a prominent seat at the governors' meeting with Barack Obama yesterday in Philadelphia, and describes the stimulus options on the table:
Quick-turnaround capital projects, renewable energy, extension of unemployment benefits and $40 billion in health care assistance were among the topics covered in the 105-minute meeting with the National Governors Association.
In my piece posted yesterday in the Guardian, I reviewed the impact of the current crisis on Delaware:
Nearly a third (32.5%) of Delaware's economy depends on the finance and insurance industries, far more than any of the other 49 states, including New York.
Supply side proponents take note: As I noted here on Monday, state aid of any sort would have a greater economic impact than tax cuts of any sort. But don't take my word for it. Take it from an economist, Mark Zandi, who who worked for the Republican candidate in the last presidential election:
Zandi, who served as an adviser to John McCain's presidential campaign, judges that extending George Bush's tax cuts would return just 30 cents in economic impact for every dollar of cuts. So much for the belief that tax cuts pay for themselves.
Without federal aid, states would be forced to either cut services or raise taxes; both options would suck money from the economy. But a federal assistance package for the states would provide the greater "bang for the buck" as Zandi noted in his testimony before Congress last month.

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