Congress is poised to extend a taxpayer-funded lifeline to cash-strapped states after the Senate on Wednesday advanced another round of $26 billion in stimulus spending for teachers and health care, and House Democrats said they will break their six-week summer vacation to return to Washington to vote on it next week.
Facing pressure from public employee labor unions and state budget officials, Democrats are rushing to get the money in the pipeline before the school year begins, and have painted the new stimulus spending as a key ingredient to fight unemployment.
“Today, the United States Senate did its job. We saved people’s jobs,” Senate Majority Leader Harry Reid, Nevada Democrat, said minutes after fellow Democrats, joined by two Republicans, broke a GOP-led filibuster of the bill. The Senate will take a final vote Thursday, then send the bill to the House, which will reconvene next week and vote on the bill Tuesday.
President Obama has indicated that he will sign the measure if it reaches his desk.
Republicans argue that sending more aid to states only makes an eventual budget reckoning tougher, and blasted the idea of reconvening to pass the bill.
“The American people don’t want more Washington ’stimulus’ spending - especially in the form of a payoff to union bosses and liberal special interests,” said House Minority Leader John A. Boehner, Ohio Republican. “This stunning display of tone-deafness comes at the expense of American workers.”
The bill would send $10 billion to localities to prevent teacher layoffs, and would extend $16.1 billion to help states cover costs of Medicaid, the federal-state health care program for people with lower incomes.
President Obama called the Senate’s vote “an important step towards ensuring that teachers across the country can stay in the classroom and cash-strapped states can get the relief they need.”
But the bill falls well short of the president’s calls earlier this summer for a much broader round of stimulus spending.
With the unemployment rate still hovering just shy of 10 percent, Democrats fear voters will punish them at the polls in November if they cannot demonstrate progress. But Republicans have stymied those efforts, arguing that it’s more important to tackle record-setting deficits and debt. The debt stood at $13.3 trillion as of Tuesday.
Still, the new lifeline is good news for the more than two dozen states that had been counting on the extra money to balance their budgets and avoid deeper cuts to state services.
California officials say the additional money would help them avoid upwards of $1.3 billion in cuts. Illinois could forgo trimming $550 million. In New York, lawmakers could be saved from $1.4 billion in cuts.
“It is absolutely critical,” New York Gov. David A. Paterson’s spokeswoman, Jessica Bassett, said of the Medicaid extension.
Senators said Ohio would have had to lay off 5,000 teachers without the money, while Washington state would have had to lay off 3,000.
The additional federal dollars for Medicaid were scheduled to run through Dec. 31. Under the new bill, the money will run through the first six months of 2011. June 30 is the end of the fiscal year for most states.
The House approved the money as part of a broader emergency war-spending bill, but the Senate insisted on separating the provisions. Now the House will reconvene to consider the stand-alone bill, said House Speaker Nancy Pelosi, California Democrat.
“As millions of children prepare to go back to school - many in just a few days - the House will act quickly to approve this legislation once the Senate votes,” she said.
Wednesday’s vote to overcome the filibuster was 61-38, with Sens. Olympia J. Snowe and Susan Collins, both Maine Republicans, joining the entire Democratic caucus in supporting the new spending.
The new spending was offset by increasing taxes on some multinational companies and cutting existing spending, including more than $2 billion from last year’s $862 billion stimulus bill. Earlier this week, Mr. Reid had to delay a vote in order to find an additional $4 billion in revenue to cover the entire cost of the bill.
But the spending in the bill is front-loaded to 2011, while the tax increases are spread out over the next decade, which means the bill leaves a $22 billion deficit in fiscal 2011.
Republicans said the first stimulus failed, and questioned why the federal government should continue to fund state and local government jobs when the private sector is suffering more.
“Americans are more intent than ever on reversing the trend of centralizing more power in Washington. They’re alarmed at the fact that the federal government is now for the first time in our history the single largest source of revenue for the states,” said Senate Minority Leader Mitch McConnell, Kentucky Republican.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
• Seth McLaughlin can be reached at smclaughlin@washingtontimes.com.
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