Coming Soon: A $90 Billion Anti-Stimulus Plan : Planet Money States are facing a collective $90 billion in budget deficits that will have to be closed by some combination of spending cuts and tax increases.
NPR logo Coming Soon: A $90 Billion Anti-Stimulus Plan

Coming Soon: A $90 Billion Anti-Stimulus Plan

There's this broad debate right now between pushing the federal government to spend more, to fight unemployment, and pushing the government to spend less, to fight rising deficits.

But state governments, most of which start their new fiscal year in July, can't engage in that sort of debate. They have to balance their budgets every year.

And they're facing a collective $90 billion in budget deficits that will have to be closed by some combination of spending cuts and tax increases, Roll Call points out.

As we've noted before in the context of Europe — where countries in bad fiscal shape are cutting budgets even as they face high unemployment and shrinking GDP — austerity measures are basically the opposite of stimulus measures.

They tend to lead, at least in the short term, to less economic growth and higher uneployment.

State spending fell for most of last year, and in the first quarter of this year, according to federal data. And, excluding education, state governments cut their employment rolls by 13,000 during May, according to the latest jobs numbers.