Free Money Or Greater Burden?

Pennsylvania has not known the meaning of fiscal responsibility for quite some time. Unfortunately, for working Pennsylvanians, that is not about to change. Pennsylvania’s General Fund revenues are already $374 million below estimate for the 2009-10 fiscal year, and certain to increase.

Although it might come as a relief to legislators that President Obama could release funds to states to boost Medicaid payments, there is no respite for taxpayers. The state of Pennsylvania is poised to get $850 million in additional federal aid.

There is no such thing as free money – funds that the government borrows or prints will only affect our wallets in the future. Increased federal aid only augments the problem and creates perverse incentives for states to spend more.

Furthermore, Medicaid is a program in dire need of an overhaul. Currently, almost 26 percent of the Pennsylvania budget can be chalked down to Medicaid spending. With Medicaid spending increasing at 8 percent annually, its long term fiscal situation is unsustainable.

But instead of fixing Medicaid, budget, pension, unemployment benefits, and a host of other problems, the state and federal government push the problem away for another day while increasing the burden on future generations of taxpayers.