The U.S. Senate faced a critical vote yesterday on measures that are important to the country’s continued economic recovery, including a six-month extension of additional federal funding to states for Medicaid (also known as FMAP), as well as an extension of Unemployment Insurance. The failure to pass these provisions threatens to slow the nation’s economic recovery.
The nation’s economic recovery remains fragile, and can be harmed by state actions to balance their budgets. The Center on Budget and Policy Priorities finds that the projected budget gaps that states must close for the fiscal year starting this July total $140 million. They estimate that state actions to close these budget shortfalls could cost the economy up to 900,000 public and private sector jobs next year – the wrong way to go if we want to end the recession and reduce unemployment. The extension of federal help to the states through FMAP would prevent deeper state budget cuts and related job losses.
Minnesota could receive approximately $220 million in additional funding from the provision; some estimates based on different but reasonable assumptions come up with higher figures. Through this May, Minnesota has already received nearly $1.3 billion in additional Medicaid funds thanks to the enhanced matching rate, funding that has protected health care for thousands of Minnesotans and has saved jobs.
The nonpartisan Congressional Budget Office (CBO) says that temporary assistance to the states, as well as Unemployment Insurance benefits, are among the most effective measures the federal government can take to create jobs and increase demand in the economy.
Some members of Congress have voted against these provisions, arguing that the nation must focus on reducing its long-term deficit. But legislation to help struggling families survive the worst economic recession since the Great Depression has not been a primary contributor to the growth in the long-term deficit. The more significant contributors include the economic downturn, the 2001 and 2003 tax cuts (that disproportionately benefited the highest-income households in the nation), and the costs associated with the wars in Iraq and Afghanistan. The extension of the enhanced Medicaid matching rate for the states is only a temporary measure – it would not add significantly to the long-term federal deficit.
In failing to pass legislation that extends help to the jobless and aid to the states, Congress is turning its back on the most effective tools it can use to help Minnesotans struggling in these tough times and help the nation’s economy recover. We are fortunate that both of Minnesota’s U.S. senators, Amy Klobuchar and Al Franken, support these provisions.
-Steve Francisco
