Alexander: “State Bailout Bill” Forces States to Spend More, Says New Taxes Chase Jobs Overseas

Says States Have Now Become “Wards of the Central Government”

Posted on August 4, 2010

WASHINGTON – Senator Lamar Alexander (R-Tenn.), chairman of the Senate Republican Conference, made the following remarks today on the Senate floor prior to voting against legislation designed to makeup shortfalls in state budgets, but which, according to Alexander, will restrict governors from making necessary adjustments to balance their states’ budgets:

On the bill’s effect on higher education and jobs in the U.S.:

  • “This bill has $10 billion for states to pay for teachers. That sounds good, but it ties the hands of the governors and their legislatures so they can't change their state funding levels if their states are in trouble.”
  • “Second, it has $16 billion for states to pay for Medicaid. That sounds good, too, except it ties the hands of the states and the governors so they can't adjust their state Medicaid programs. The reason California students are facing a 32 percent increase in tuition is largely caused by California's Medicaid expenses – the state program that has so many federal rules – that keep going up in cost.  And the money that would be going for the University of California system or the University of Tennessee instead goes to Medicaid and then there's not money for the university, which means tuitions go up.”
  • “Finally, part of the way this bill is paid for is through almost $10 billion of permanent tax increases on multinational corporations that would have the effect of driving jobs overseas. Just one more action by the Democratic majority and this administration in the middle of a recession, at a time of near 10 percent unemployment for the nation, that makes it harder to create new jobs in the United States.”

On the federal government’s control over state Medicaid spending proposed by the bill:

  • “This country, which was created by states that then created a central government of limited powers, now has a central government that has made the states the wards of the central government.”
  •  “This bill says to the governors, ‘Don't you change Medicaid. You're not even allowed, if you take this money, to make changes that would save money in Medicaid.’ So, spending for Medicaid goes up because Washington requires it to go up. And that means tuitions in Tennessee and all across this country are going to be higher because of the legislation we're considering today. It's ruining our colleges and universities because states have no money left for them.”

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