Anti-stimulus out west

By Fester:

A significant portion of the Obama stimulus plan is merely going to used to counter pro-cyclical state and local level policies.  For instance, Medicaid reimbursement rate changes, and extended unemployment as well as expanded food stamp payments will be eaten up in their net impact by state governments cutting spending on social services, social stabilizers and cyclical buffers. 

California is providing a prime example of anti-stimulus:

The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday....

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students. 

The biggest anti-stimulus in this package is the $300 million in payments that are being delayed to the needy and elderly.  The needy by definition and program eligibility design don't have signicant savings or assets to fall back upon.  They may have informal social networks for support and high cost credit as a gap filler, but the marginal dollar will be quickly spent.  

This is where a decent chunk of the federal spending will go -- to gap fill cuts in state expenditures.

Comments

[wmr]

Hi Fester,

I see that you still haven't put up your essay on Clausewitz, but not to worry: I won't hassle you about it because I won't be going back to Chicagoboyz anymore, anyway.

I've been reading about Nixon torpedoing Bretton Woods and triggering the international capital surges which we're experiencing the ultimate results of now. As a result, I find that my gorge rises at the sight of the leering mugshots of Friedman, Hayek, Sowell, and Reagan.

The posts haven't really added anything of value to my reading of CvC since the link to a http://www.clausewitz.com/CWZHOME/CWZBASE.htm>good site back in December. So thanks for that and I wish you well if you ever venture into the bears' cave.