Tens of billions of dollars of aid for health care, welfare and education will disappear in two years and leave states with no way to finance the expanded programs. Gov. Perry sent a letter to President Obama last week warning that Texas may refuse certain stimulus funds."If this money expands entitlements, we will not accept it. This is exactly how addicts get hooked on drugs,"
Consider South Carolina:
- Its annual budget is roughly $7 billion and the stimulus will send about $2.8 billion to the state over two years.
- But to spend the hundreds of millions of dollars allocated to the likes of Head Start, child care subsidies and special education, the state will have to enroll thousands of new families into "permanant" programs.
The Medicaid money for states is also a fiscal time bomb:
- The stimulus bill temporarily increases the share of state Medicaid bills reimbursed by the federal government by two or three percentage points.
- High-income states now pay about half the Medicaid costs, and in low-income states the feds pay about 70 percent.
- But in 2011 almost all the $80 billion of extra federal Medicaid money vanishes.
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