Gov. Linda Lingle’s sharp criticism of a new federal law providing $26 billion in stimulus money to states for Medicaid and schools — after she joined other governors in asking for it — is a head scratcher. The expenditure does not add to the federal deficit and provides states with what Moody’s Investors Service calls "a bridge during a tenuous economic recovery."
In February, Lingle was among 42 governors of both parties who signed a National Governors Association letter to congressional leaders asking for extra Medicaid funding through the current fiscal year to keep it from lapsing on Dec. 31.
The bill signed into law this week by President Barack Obama provides $16.1 billion for Medicaid, the health care program for the poor, and $10 billion to prevent tens of thousands of layoffs of public school teachers. Hawaii is expected to receive $39 million of it for education.
After the law was enacted, Lingle called it a "federal bailout" that "is intended to be a one-time shot in the arm that must be paid for in the future. It merely defers the day of reckoning that will require a reprioritization of state services and a reduction of spending."
Newly elected Republican Rep. Charles Djou joined in his party’s mantra, contending it would inflate the national budget deficit and long-term debt.
Actually, the legislation was funded by reducing some food-stamp payments after 2014 that had been raised by last year’s stimulus bill and by limiting foreign tax credits used by U.S.-based multinational corporations doing business abroad.
"The bill is paid for, and the bill’s opponents know this," Rep. Mazie Hirono said on her website. "One of the ways we pay for the bill is by closing a tax loophole that is used by corporations shipping jobs overseas. In fact, some are voting against this bill because of this tax provision."
Lingle’s criticism of the legislation does not mean her administration will turn away the money. Lillian Koller, her director of human services, acknowledged that the money will help the state.
"We are not saying that we are not going to accept this money or that we don’t appreciate having it to help us maintain our expenditures," Koller said. "But it doesn’t do anything to solve the long-term problem."
Nobody is saying it does. The legislation was needed to assure that some 160,000 teachers nationwide, plus 150,000 police officers and firefighters, who would face layoffs — or furloughs? — will be able to keep their jobs full-time at this juncture while the country struggles to rise from a troubled economy. It is money well spent without running up the deficit.