I didn’t get around to linking to this earlier and I think it really deserves more attention. It’s a long and wonky post, but to the extent that I understand this stuff, I think Jon Perr has a brilliant plan:
So here is a proposal to rescue the states and protect the fragile American economy, all with only a small impact on the federal government’s long-term debt. Establish a $200 billion, two-year federal fund providing loans to those states desiring them to prevent further layoffs and to help pay for the rising, recession-induced costs of Medicaid, unemployment and other essential services. Call it the State Assistance Fund (SAF).
Or as Jon suggests, the alternate title could be “Recovery and Economic Assistance for Governments Around the Nation” – THE REAGAN ACT.
It’s purely voluntary and the states get to decide how and where to spend the money. The blustering, small government hypocrites can opt out on “principle”, while the smart governors could use the cash to stablize their budgets. I don’t see any reason why it wouldn’t work.