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States have received over $160 billion in budget relief since the beginning of the Great Recession both through the Recovery Act of 2009 and the Education Jobs and Medicaid Assistance Act of 2010.  The Obama administration is doubling down on this approach in its proposed American Jobs Act which includes $30 billion in direct state budget support and billions more in infrastructure and other program spending that would flow through the states over the next two years.  However, the deficit proposal revealed by the President today calls upon states to shoulder billions in long-term costs as part of a broader effort to set the nation on sounder fiscal footing. 

One week after the President unveiled the American Jobs Act, House Speaker John Boehner delivered an address before the Economic Club of Washington outlining the GOP’s Plan for America’s Job Creators.  While the President’s $450 billion plan relies on a 60/40 mix of tax measures and new spending to stimulate job growth, Speaker Boehner’s proposal rejects short-term spending in favor of a three-pronged agenda of long-term tax reform, deregulation, and reduced government spending. 

President Obama’s 155-page jobs proposal landed on Capitol Hill this week and both parties are rallying their troops for a partisan fight.  Prospects for adoption remain low and support among state leaders will likely divide along party lines.  However, the bill does contain $30 billion in state fiscal relief, in the form of the Teacher Stabilization Fund, which if enacted would have a direct impact on state budget decisions throughout the country.

The President fired a shot across the bow of Congress last night with his $450 billion proposal to address the jobs crisis.  In a reprise of the Recovery Act of 2009 (the “stimulus”), the majority of new spending in the proposal would flow through state and local government with over $110 billion devoted to infrastructure and education alone.  However, state budget planners need not revise their mid-year predictions just yet as the bill will face a hurricane-force headwind as soon as it hits the House of Representatives next week. 

Congress is scheduled to reconvene for what is sure to be a historically busy fall session next week. With the creation of the Joint Select Committee on Deficit Reduction, and the president set to address a joint session of Congress this Thursday to lay out his plan for economic recovery, the next few weeks may set the political tenor for the months, and perhaps years, to come.

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