Obama's Bailout Trap

Obama's latest bailout -- a bill directing $26 billion in aid to the states -- could put some GOP politicians in a tricky spot.

Despite what the President may say, bailouts are never apolitical. Regardless of whether you think TARP was justified (I did and still do) it was hard to miss the obvious political considerations motivating the timing and makeup of the $26 billion state aid package which the House passed yesterday and the president immediately signed.

The bill, which passed the House by 247 to 161, delivers serious money not only to bastions of Democratic support (namely, teachers unions), but also specifically to states like Florida, California and Texas, thereby putting Republican candidates into the unenviable spot of having to take a position on whether or not they would accept the federal funds.

Yesterday's bill directs $1.3 billion to Florida. By doing so, it puts Senate candidate Marco Rubio and gubernatorial candidate Rick Scott (and I guess, Bill McCollum) in the awkward position of having to explain why they would not accept benefits that em>the Miami Herald described as follows<:

This second — and probably last — round of federal economic-stimulus spending will deliver an estimated $553 million of education money to Florida to save nearly 9,000 school jobs... And it will plug an estimated $794 million into state coffers, mostly to cover health care for the poor. The federal infusion will help the Florida Legislature balance its budget and reduce pressure to cut state services, lay off government workers, curb contracts with private companies or raise fees.

Good luck telling everyone you would reject that, Mr. Scott and Mr. Rubio...

Of course, Charlie Crist is happy. He supported the stimulus from the start and he immediately went on record supporting it, telling reporters gathered in Tallahassee that “We need all the help we can get, especially in this economy. It’s all about jobs, jobs, jobs.”

The bill sends California some $2.5 billion dollars... which is roughly $500 million less than the current governor assumed would be coming his way in the latest budget. But nonetheless, it certainly seems like a pretty good talking point for Senator Boxer (one can imagine her rhetorically asking groups of gathered supporters where the state would be were it not for the brave actions of her and her colleagues...).

But perhaps most revealing of all was the way the bill handles the state of Texas. The bill has a provision that makes Texas' receipt of some $830 million in federal funds contingent upon its maintaining its current levels of education spending through 2013. Texas was the only state that had such a provision applied to it. It puts Gov. Rick Perry and his fellow Texas Republicans in an awkward spot.  Perry and the Texas GOP could ignore the president, cut spending and then get hammered by Democrats for cutting jobs, education spending, AND not accepting federal stimulus funds.  Perry’s other option is to maintain the current levels of spending and then get the very funds he roundly criticized being handed out in the first place; all the while looking as if he is merely following the president’s lead.

Using federal stimulus funds to screw governors you don't like and help states where Democrats are in trouble? This President is not only not above "politics as usual," he is good at politics as usual.

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