When Congress passed $26 billion in fiscal aid to the states, including $96.5 million in education funding and $128 million in Medicaid assistance for Iowa, Republican gubernatorial candidate Terry Branstad avoided commenting on the issue. Scott Keyes of Think Progress was in Iowa recently and got Branstad to speak on the record about the issue. Click the link for the audio and the full transcript. Excerpt:
[Think Progress]: They just passed that big state aid bill out in Washington. I was curious how you felt about that.
BRANSTAD: I have real concerns because there's strings attached to that. And it's one-time money, so it doesn't solve the problem, it just puts it off a year. And it increases the federal debt. I don't think they should have done it. I'm not sure, we've got to see what the strings are and whether or not we should even accept it or not.
Branstad added that he was against the 2009 stimulus bill and wasn't sure whether he would accept or reject stimulus funding for Iowa.
Perhaps Branstad has never heard of economic cycles. Congress approved the stimulus bill when the U.S. was in the middle of the worst recession since World War II, and state revenues were dropping at the sharpest rate seen in 60 years. Although the recession is technically over, and state revenues are increasing in Iowa, shortfalls are still projected in key social services.
Branstad says federal assistance "doesn't solve the problem, it just puts it off a year." But if the economy continues to improve, state budgets will be under less strain in the 2012 fiscal year. Branstad would rather give up an additional $96.5 million for Iowa schools during the current fiscal year, which would cost approximately 1,800 teachers' jobs. He would rather do without an extra $128 million for Medicaid, and I doubt he'll offer an alternative budget showing how he would meet the need for those services. Branstad can't explain how he would have balanced the current-year budget without stimulus funds, just like he can't explain how he would pay for his new spending promises.
Branstad is wrong about the $26 billion fiscal aid bill adding to the federal deficit, by the way. The Congressional Budget Office confirmed that the bill's costs are fully offset by closing tax loopholes and various spending cuts.