The Starving States
Inside Obama's meeting with a beleaguered group of governors.
Ben Franklin invented the fire-fighting cooperative here in Philadelphia in the 18th century. But now his beloved and still gracious city has lost so much tax revenue in the Great Recession that it is shuttering firehouses from Northern Liberties to South Street.
So this was an appropriate place for Barack Obama to come to listen to the nation's governors tell him horror stories about their state budgets, which are falling deeper and deeper into the red.
Everybody wants money from the feds in general and the president-elect in particular. One day it's the banks; then it's the auto companies. Now it's the states.
It's not yet Christmas, and Obama was not elected to be Santa Claus. But the talk leading up to Inauguration Day has assumed the air of a Dickensian orphanage, with the inmates shouting, "more please!"
They are entitled: they are starving.
By state law and by state constitution in most places, governors must balance their own budgets. And unlike the federal government (which has no balanced-budget law with real teeth in it), the states can't print their own money to cover their bills and debts.
They are broke, as are an increasing number of cities and counties. That destitution, in turn, will have consequences for Americans everywhere—in the form of higher medical bills, tuition fees for schools and colleges, reduced social and community services (such as libraries) and higher taxes and fees of all kinds.
According to the National Governors Association, the states could be as much as $80 billion short of cash this fiscal year (which ends next July) and more than $100 billion short next year. And that is out of a collective budget of $1.2 trillion in all the states.
To discuss this gathering catastrophe, the president-elect—former community organizer and state legislator—asked to meet with and hear the concerns of the nation's governors. As far as any one could tell, no president-elect had ever asked for such a meeting, at least not this early in his pre-presidency.
The chairman of the governors' group, Pennsylvania Gov. Ed Rendell, is a proud Philly guy. So he set the closed-door meeting for Congress Hall, next door to Independence Hall. There, from 1790 to 1800, the new Congress met until the capital was moved to Washington, D.C.
The governors sat at desks in what used to be the House of Representatives, and talked with Obama and Vice President-elect Joe Biden in detail for nearly two hours in a closed-door session.
It was a polite but fairly grim session, I am told by participants. Obama was "regal, elegant and very gracious," said Republican Gov. Mark Sanford of South Carolina. But the numbers that prompted the meeting were so bleak that there was nothing to laugh about.
The governors made a three-part pitch that most (but not all) of them agreed on:
Obama listened carefully and politely to all of this, but made no hard-and-fast promises, according to Rendell. "There are no guarantees, but I think it is fair to say that the president-elect and the vice-president elect are committed to these basic ideas and proposals. The final details of them is anybody's guess," Rendell added.
Here's my guess: once he becomes president, Obama is going to ask the Congress to give the governors pretty much what they want, as long as they make good on their own promises—reiterated to Obama at the meeting—to share the burden by cutting state spending and raising state revenues in their own legislatures.
Obama can't save every firehouse in Philly, but Rendell & Co. will get most of what they want.
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Howard Fineman is Newsweek's Senior Washington Correspondent and Columnist, senior editor and deputy Washington bureau chief. He is the author of "Living Politics," a column that began on MSNBC.COM and Newsweek.com and that now also appears in the print magazine. An award-winning reporter and writer, Fineman also is an analyst for NBC News and MSNBC, appearing regularly on "Countdown with Keith Olbermann," "Hardball with Chris Matthews" and "TODAY." The author of scores of Newsweek cover stories, Fineman's work has appeared as well in The New York Times, The Washington Post and The New Republic. His 2008 national best-selling book, "The Thirteen American Arguments," was released in paperback by Random House in the spring of 2009.
One of the nation's leading political reporters, Fineman has interviewed every major presidential candidate from (then-vice president) George H.W. Bush in 1985 to (then senator) Barack Obama early and often in the 2008 campaign cycle. His current work focuses on the Obama Administration and its top officials, as well as on Congress and politics throughout the country. Although based in Washington, Fineman travels widely in the U.S. and has covered politics and other events in 49 of the 50 states.
Fineman's work has produced many milestones and awards. A cover story in November 2001 featured President George W. Bush's first extensive interview after 9/11. Another cover, "Bush and God," was part of a series of articles that won the 2003 National Magazine Award for General Excellence. His reporting has helped Newsweek win many honors from the Magazine Publishers Association and the American Journalism Review. Other awards include a "Page One" from the Headliners Club of New York, a "Silver Gavel" from the American Bar Association and a "Deadline Club" from the Society of Professional Journalists (SPJ). In 2006 he received the Alumni Award from Columbia University's Graduate School of Journalism.
As a reporter and writer, Fineman ranges widely. Besides campaign-year covers, other projects have included: race and politics, the impact of digital technology on society, the influence of Hollywood on politics, the rise of the religious right and of conservative talk radio. He has interviewed business leaders such as George Soros, Bill Gates, Steve Case and Robert Rubin and entertainment figures such as Warren Beatty, Jane Fonda and Jay Leno.
Although now under exclusive television contract to NBC, Fineman over the years has appeared on major public affairs shows, such as Nightline, Face the Nation, Fox News Sunday, Larry King Live, Charlie Rose and the NewsHour. He was a regular panelist on Washington Week in Review on PBS (1983-95) and on CNN's Capital Gang Sunday (1995-98). He worked with Ted Koppel on Nightline specials, and has been a guest on Comedy Central's "The Daily Show with Jon Stewart" and "The Colbert Report."
A native of Pittsburgh, Fineman began his career at The Courier-Journal in Louisville, covering the environment, the coal industry and state politics before joining the newspaper's Washington bureau in 1978. He moved to Newsweek in 1980, was named chief political correspondent in 1984, deputy Washington bureau chief in 1993, senior editor in 1995 and senior Washington correspondent and columnist in 2008.
Fineman holds an A.B., Phi Beta Kappa, from Colgate, an M.S. in journalism from Columbia and a J.D. from the Brandeis School of Law at the University of Louisville. His legal education included a year as a visiting student at the Georgetown University Law Center. He received Watson and Pultizer Traveling Fellowships for study in Europe, Russia and the Middle East, and has traveled to more than 40 countries, among them China, Vietnam, Japan, Ukraine, Israel, Turkey and the West Bank Palestinian Territories.
Fineman is married to Amy L. Nathan, a senior counsel at the Federal Communications Commission. They live in Washington with their two children, Meredith and Nicholas.
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