Tuesday, August 10, 2010

Does the $25 billion Congressional bailout of state budgets have a multiplier?

Sure.  What is it?
Well, we would ask whether Congress has been crowding out the states more than the states crowd out themselves.  The States are struggling with impossible promises they made in the past and trying to fulfill unfunded mandates from Congress.  If the mandates are the greater restraint, then a Congressional bailout would have a multiplier greater than one.  We are looking for the total distribution network of government services to be more minimum after the bailout than before.

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