White House Likely Won't Aid States With Budget Shortfalls

White House Likely Won't Aid States With Budget Shortfalls
7/1/2009 5:00 PM ET

(RTTNews) - The White House Wednesday all but ruled out further assistance to California and several other states struggling to enact budgets for the upcoming fiscal year.

California, in particular, is facing a shortfall of tens of billions of dollars and lawmakers have raised the prospect of sending out IOUs to make some state payments.

Asked whether further aid might be forthcoming as the states enter the new fiscal year, White House Press Secretary emphasized that the federal government has already distributed roughly $144 billion in Medicaid and education funds to help states bridge their budget gaps.

"There are a number of states that find themselves at the end of the fiscal year and required to pass budgets. We're certainly watching," Gibbs said. "But I think the major contribution from the federal government has been an increase in Medicaid and education money to go to helping to close some of those fiscal gaps."

Gibbs also noted that California had applied to receive some of the funds available under the financial industry bailout, but had been told that it wasn't possible under the law.

"Understand, $144 billion represents a pretty large chunk of total state budget shortfall," he said. "It's not the whole thing, but I think it's an important step that we took, understanding that an economic recovery had to include individual state governments."

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"Black Swan events" are unexpected shockwaves of instability. What do you call a completely predictable shockwave of instability? California.-Charles Smith

...in the absence of objective, unbiased and fair external regulators, it is the responsibility of everyone, but most notably insiders, to cleanse the system