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Ryan’s Budget Plan Would Dig a Fiscal Grave for States

Rep. Paul Ryan’s (R-Wis.) proposed federal budget, as we pointed out, is bad for the nation and for working people.

But it gets even worse: Ryan’s plan, which the U.S. House has approved already, would gut what little is left of state budgets by slashing funding for a range of programs. States and localities would lose $247 billion from 2013 through 2021, in addition to the cuts they would absorb because of caps on national spending, according to the Center on Budget and Policy Priorities (CBPP). (Click on chart at left to expand.)

There’s been a lot of talk about the nation’s economy falling over the “fiscal cliff” if Congress doesn’t act by the end of the year. This so-called “sequestration” would result from a combination of the expiration of middle-class tax cuts and huge across-the-board spending cuts.

But the CBPP points out that Ryan’s proposed cuts in non-defense discretionary spending to the states are so deep they would be three times deeper in 2014 than the cuts from sequestration. In later years, the difference would be even larger.

According to the CBPP, Ryan’s cuts to states’ discretionary funding would target: 

  • Working people, cutting skills training, employment services, adult and vocational education and unemployment insurance administration.
  • Transportation, including highway and road improvement, bridge planning, public transit upkeep and other transportation systems. Over the next nine years, the Ryan budget would require about $194 billion in cumulative cuts to state and local transportation aid, relative to current levels adjusted for inflation.
  • Elementary and high school education, especially programs for children from low-income families and children with learning disabilities. This at a time when states’ education obligations continue to grow. States expect to educate 540,000 more K-12 students and 2.5 million more public college and university students in the upcoming school year than in 2007 to 2008.
  • Public safety and disaster response, including disaster relief and funds to hire state and local police officers. Housing and community development programs, including assistance to low-income residents to help pay for heating and cooling bills and rental assistance.

To put Ryan’s budget plan in perspective: Since 1976, federal discretionary funding to states and localities has averaged 1.4 percent of the nation’s Gross Domestic Product (GDP). By 2021, the Ryan budget would reduce this funding to about 0.6 percent of GDP, less than half the historical average.

As the report notes, state budget cutbacks already have significantly slowed the nation’s efforts to claw back to health. As Ari Berman at The Nation writes, if Ryan’s proposal became law,

the most disturbing feature of Ryan’s budget is that, in the midst of a prolonged recession, it would cost the U.S. economy millions of jobs....In contrast, the jobs plan introduced by Barack Obama last September would create 1.9 million jobs and reduce the unemployment rate by a full percentage point, according to Mark Zandi, chief economist at Moody’s.

States have been forced to close enormous budget shortfalls totaling nearly $600 billion since the 2009 fiscal year. The actions that states have taken to close these budget gaps, primarily spending cuts, have imposed a significant drag on the economic recovery. Since the recession took hold in August 2008, state and local governments have shed 675,000 jobs.

Read the full study here, which includes a breakdown of how much the Ryan budget will cost each state.

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