What Obama Could Do for States

Barack Obama will take over as president at a tumultuous time for state governments, many of which have been jolted by an economic downturn that analysts say could last  into 2010.

Whether Obama can strengthen the relationship between the federal government and the states will ultimately depend on how soon he can turn around the economy, according to state officials.

As the national economy goes, so goes the states'. Falling home values, job losses and the credit crunch brought on by the Wall Street meltdown in September are siphoning tax revenue from states after years of steady growth. Governors are freezing or cutting state jobs, reducing services and raising fees to balance budgets. Compounding the difficulty, many companies are laying off workers, which will pressure states to increase spending on social services such as Medicaid and unemployment benefits.

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