Republican lawmakers, governors battle over extension of stimulus program

Another fight over spending is breaking out between Republicans in Washington and GOP governors across the country.

The battle echoes last year’s fight over the stimulus bill, which was backed by some Republican governors and opposed by nearly all GOP members of Congress.

This year’s dispute is over a program created in last year’s massive stimulus bill that increased the federal aid for states' Medicaid obligations.

California Gov. Arnold Schwarzenegger and other Republican governors want to extend the program. Along with some Democratic governors, they say the extra federal Medicaid funding is still needed to help close state deficits.

“I understand the need to pay for and restrain federal spending,” wrote Schwarzenegger in a letter this week. “I support restraining federal spending. But cutting the only funding designed to help states maintain the very safety-net programs Congress mandates us to preserve will have devastating consequences.”

Senate Democrats have included a six-month extension of the program, now set to expire at the end of this year, in a tax bill expected to be voted on this week. Senate Republicans oppose the measure unless its $24 billion cost is fully offset with other spending cuts.

“I want to pay for everything,” Sen. Scott Brown (R-Mass.) said. “That's the problem. Nobody wants to pay for these things.”

Schwarzenegger, Vermont Gov. Jim Douglas (R-Vt.) and Florida Gov. Charlie Crist (Fla.) -- have publicly praised the state aid in the stimulus as helpful in retaining jobs and keeping the economy from sinking further, a sentiment that has put them at odds with the
congressional GOP's anti-spending message.

Crist’s strong support for the measure, symbolized by a campaign-style appearance with Obama last year, hurt his popularity with the Republican base and contributed to his decision to leave the GOP and run for Senate as an independent this year.

Douglas, the chairman of the National Governors Association, has argued that lawmakers must pass the extension of the enhanced federal Medicaid match money soon because state legislatures are readying their budgets for next year.

“The extent of debt is very worrisome,” said Douglas spokesman David Coriell. “At the same time, states do need a bridge. Many states built this expectation of funds in their budgets, and without it, [there would be] either tax increases or the cuts to state government programs that would be pretty devastating.”

A total of 16 GOP governors plus Crist joined Democratic governors in sending another letter in February to congressional leaders urging passage of the extension in February.

Schwarzenegger has gone further in pressing for more stimulus, recently backing a push by Democrats for $23 billion in fiscal aid to help states stave off teacher layoffs. That would come on top of the $44.5 billion handed out to states and local governments to save public worker jobs in the 2009 stimulus.

California, which struggled to close a $40 billion 2010 deficit and faces a $19 billion deficit next year, could use federal help to avoid weakening social programs that people are relying on, Schwarzenegger said.

The support for more stimulus isn't unanimous among GOP governors.

Texas Gov. Rick Perry (R), who was one of six governors who considered turning down stimulus dollars last year, may also reject the new round of funds.

Perry's office said Washington's push for more spending was exacerbating healthcare problems.

“This temporary [Medicaid] proposal, like their new health care bill, spends money they don’t have,” Perry spokeswoman Lucy Nashed said. “Instead of giving states the flexibility to craft fiscally responsible programs, Washington continues to force states to bear significant costs of a program that is controlled by Washington. While the governor remains concerned about the federal government spending money it doesn't have, we will wait to see the final version of the bill before making a decision.”

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