CSG DC

Leaders of the nation’s largest state and local associations were summoned to the White House this morning to hear a preview of the President’s forthcoming jobs address from Danielle Gray, Deputy Director of the National Economic Council, and Cecilia Muñoz, White House Director of Intergovernmental Affairs.  While the administration is trying to keep a close hold on details in advance of the speech, it is clear that the President will propose both a continuation of existing programs and new initiatives across three major policy areas: taxes, infrastructure, and unemployment assistance.

Though Congress remains on August Recess, scheduled to return to Washington after Labor Day, the powerful new Joint Select Committee on Deficit Reduction—or “Super Committee”—has started to take both a physical and ideological shape.

Author David Osborne wrote the core focus of state government is to "educate, medicate and incarcerate." In this new age of austerity, however, the state-federal funding mechanisms that have underpinned these priorities for nearly half a century are beginning to fray.  The Budget Control Act of 2011 may be just one week old, but with the stock market in free-fall, it's going to have to grow up fast. Washington pundits are tripping over themselves to handicap the deliberations of the newly formed "supercommittee" and pouring through vintage 1980s news articles to learn how the Gramm-Rudman inspired "sequestration" process may play out.  

After more than six months of partisan bickering, Washington leaders managed to avert default by stealing a page from the Reagan era.   The 74 page bill approved by Congress revives and amends Gramm-Rudman, the marquis deficit reducing legislation of the 1980’s.  The full impact of the deal won’t be known until Congress translates the loose spending targets in the legislation into specific program cuts through the annual appropriations process, but it is clear that federal funding for states is set to drop precipitously. 

With the clock ticking and rating agencies waiting to pounce, Washington remains locked in the grips of the debt ceiling saga. This typically minor agenda item has taken the forefront and brought all other legislation to a halt. Not only are the terms of the debt ceiling vote being followed closely by political insiders and outsiders alike, but the doomsday scenarios that could result from inaction also are being explored, analyzed and planned for. If last-minute negotiations fail, what will the implications be for states?

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