We Need More Money! Wait – Maybe Not.

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There’s not a better illustration of the priority divide between Republicans in Washington DC and those in the states than the Medicaid funding passed by the House today. In a 247 to 161 vote – taken after Nancy Pelosi called her members back from recess – the chamber just passed legislation that will provide $26 billion in emergency funding to states. The money will inject cash into state budgets to prevent layoffs and extend extra Medicaid funding first distributed to states via the stimulus. (The Senate has already passed the legislation.)

The states can definitely put this money to use. They are facing a collective $84 billion shortfall and their Medicaid programs, in particular, are massive draws on their budgets. In addition to falling tax revenues, the recession has caused more people to sign up for the public insurance program, which is jointly funded by states and the federal government. On the grounds that the money constitutes yet another bailout, House Minority Leader John Boehner said, “The American people don’t want more Washington ‘stimulus’ spending — especially in the form of a payoff to union bosses and liberal special interests.”

But despite congressional Republican battle cries about government over-spending, Republican governors on the frontlines of budget crises once seemed eager to accept the extra dollars. In a letter to congressional leaders sent in February, 47 governors – including those from Puerto Rico, American Samoa, Guam, the Virgin Islands and the Northern Mariana Islands – pleaded for the Medicaid funds. “Unfortunately, the length and depth of the recession means states and territories will continue to face significant budget shortfalls long after the enhanced [Medicaid funding] expire at the end of this calendar year,” they wrote, adding that the additional funds “would greatly assist us in maintaining services and further stabilizing the economy.”

As Adam noted this morning, Indiana Gov. Mitch Daniels, a Republican who signed the Feb letter, has lately been railing against the extra Medicaid funding. A spokesman for him says that the state has recovered better than others since then and no longer needs the money. That might make sense logically and especially politically, but will Indiana reject the $434 million coming its way thanks to Congress on the grounds that it’s not needed? Nah. Reports the Fort Wayne Journal Gazette:

Daniels press secretary Jane Jankowski said times have changed since the February letter.

“We managed our way out of it. Others didn’t,” she said. “He doesn’t support another state bailout.”

But Jankowski said Daniels would cash any checks sent to Indiana by the federal government.

I wrote earlier about another Republican governor criticizing federal infusions into states, Minnesota’s Tim Pawlenty. Like Daniels, Pawlenty has said his state doesn’t need this extra money, which will flow to Minnesota anyway. (Pawlenty was one of the few governors not to sign the letter asking for extra Medicaid money.) Mississippi Gov. Haley Barbour, a Republican, is in the same boat as Daniels. He signed the letter, but now says the state aid bill is a mistake.

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