Jonathan Cohn

Behold the Anti-Stimulus

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Why didn't the Recovery Act create more jobs? Partly because the extra federal spending wasn't enough to offset cuts by state and local governments, which were reacting to declining tax revenue and balanced budget requirements. 

Congress, now under partial Republican control, isn't pumping new money into the economy anymore. But the states and local governments? They're still cutting. 

A new report from the Center on Budget and Policy Priorities summarizes the situation:

All of the 48 states releasing initial budget proposals for fiscal year 2012 (which begins July 1 in most states) have done so, and for the fourth year in a row, these budgets propose deep cuts in education, health care, and other important public services in many cases, deeper than previous cuts. These cuts will delay the nation’s economic recovery and undermine efforts to create jobs.

While nearly every state has cut spending in the past few years, some additional cuts are inevitable for 2012: because of the lingering effects of the long and deep recession, tax collections in most states remain well below pre-recession levels and lag far behind the growing cost of maintaining existing services.

To get a sense of how widespread and deep the cuts are, look closely at that chart above. The states with red shading are the ones considering cuts that would reduce spending to what it was in 2008--or below. 

To be clear, plenty of governors are making the worst of a bad situation, by cutting services more than necessary in order to accommodate reductions in corporate taxes. But some cuts are inevitable as long as the federal government refuses to give more assistance. 

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