![]() This increased the burden on students and their families and contributed to the student loan crisis that slows the economic progress of young adults today and delays long-term commitments such as homeownership. For example, reductions in state support for higher education forced public colleges and universities to raise tuition and fees. These changes in revenues and spending levels throughout our federal system had consequences with which the country continues to grapple. State aid to localities shrank, as did the number of state employees. Because state contributions to pension funds did not keep pace with their obligations, underfunding of state pension systems soared to $1.35 trillion by 2016 and remained elevated thereafter. ![]() As late as 2018, nearly half the states were spending below their 2008 levels: More than half the states were spending less per capita for K-12 education, state funding for higher education was slashed by 13%, and state investment in infrastructure as a share of GDP hit its lowest level in more than half a century. It was not until 2013 that state revenues, corrected for inflation, regained the level they had reached five years earlier. Scheppach, former executive director of the National Governors Association, predicted that the steepest economic downturn since the 1930s would result in what he called a “Lost Decade” for states, which would not fully recover until “late in the next decade.” Sadly, his prediction turned out to be correct. As the downturn abates, federal aid in these three categories would be scaled back and would go to zero when conditions have returned to normal (as defined by legislation).Īs the United States began its long recovery from the Great Recession in 2010, Raymond C. ![]() One-third of this assistance would go directly to localities in a formula that reflects population, additional expenses to cope with the consequences of the downturn, and demonstrated revenue losses. ![]() Direct assistance to states would be released on a state-by-state basis, so that states experiencing disproportionately large economic hits would get more per capita. When a state’s unemployment rate increases by a legislatively defined amount, the federal government’s matching payments for Medicaid and the Children’s Health Insurance Program (CHIP) would automatically increase, and it would qualify for extended and enhanced unemployment insurance as well. Instead, we should preauthorize economic stabilization measures, the size and timing of which would we determined by quantitative triggers. We should not be arguing about roof repairs during thunderstorms. Every time there’s a big economic downturn, we scramble to agree on adjustments to Medicaid and the Unemployment Insurance Program, and we disagree about the size, scope, and timing of relief packages for states and localities. ![]()
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