Obama Budget Includes Aid for States

The federal budget proposal that President Obama will send to Congress today (Feb. 1) includes $25 billion in emergency aid for states, even as it freezes other domestic spending.

The Wall Street Journal reported that the federal money will come in the form of a six-month extension of increased funding for Medicaid , the joint state-federal health insurance program for the poor. About $87 billion in Medicaid money is set to expire at the end of the calendar year.

Governors and other state officials have been clamoring for more federal assistance as Medicaid enrollments have risen sharply during the recession. Some governors, including California's Arnold Schwarzenegger (R), even have taken the step of including more new federal money in their budget plans for the next year, even though the money has not been approved in Congress.

The new extension of Medicaid funding originally was attached to health care legislation being debated on Capitol Hill, The Journal noted. Its inclusion in Obama's budget proposal "underscores how the government is already adapting to the stalling of health legislation in Congress," the paper said.

The Associated Press , meanwhile, reported that Obama's budget proposal also will include a job-creation plan "somewhere in the $100 billion range," according to White House spokesman Robert Gibbs. That plan is likely to include money for infrastructure projects, another priority for states.