Omigod! The debt-ceiling deal might hurt Indiana! Quick, undo it! We take back all the mean things we said! Hurry, hurry, hurry!
The last-minute debt deal approved by Congress and President Barack Obama keeps federal aid flowing to states. But Indiana won't emerge unscathed from the battle despite its own efforts to get its fiscal house in order.
The federal deal calls for lawmakers to cut $917 billion. It spares the largest chunk of federal spending — entitlement programs like Medicaid and Social Security — but targets "discretionary funding," which is where a good chunk of the roughly $9 billion the state collects from the federal government each year falls.
Transportation and education could be sitting ducks. So could labor, child welfare and environmental aid. And Indiana, which has already weathered millions in state-ordered cuts, will have to make some tough choices.
[. . .]
Though Indiana has rebuilt its reserves to nearly $1.2 billion, the state leans heavily on federal money. Close to $1 billion of the state's $1.7 billion in transportation money comes from the federal government. Indiana relied on stimulus dollars to help patch the budget through the Great Recession. The state also borrowed $2 billion from the Obama administration to pay for unemployment insurance — a loan for which state lawmakers approved a repayment plan earlier this year.
Sheesh. Did anybody suppose there would be no pain involved in a return to fiscal sanity? (Not that the debt deal actually gets anywhere close to that.) All that money borrowed and spent recklessly and dangerously has been going to stuff the government does. If we stop borrowing and spending recklessly, that means less stuff will be done.
The fact that Indiana has received so many billions in federal aid is part of the problem, isn't it? If we get any less of it, that should be considered an opportunity to discuss what government is doing, why it is doing it, whether someone else should do it or whether it should be done at all.
If there is this much hysteria over pretend budget cuts (slightly lowering the amount of debt that will be added to the federal tab over the next 10 years and calling that a "reduction"), heaven knows how people will hang on to their sanit if there is every any real fiscal discipline.
