For several weeks last fall, it looked as though the United States might be headed into an economic freefall. Federal intervention on an unprecedented scale appears to have averted a meltdown of the investment and credit markets, but how long and how deep the worst financial crisis in modern memory will be remains to be seen.
It’s obvious that the recovery will be complicated and painful. Governors and state legislators will occupy some of the toughest jobs in politics as they try to cope with a cascading set of problems affecting virtually every segment of the population, young and old, rich and poor. In the pages of this publication, Stateline.org’s 10th annual State of the States report, you’ll read about some of the unenviable trade-offs they face. Many promising policy initiatives already have succumbed to budgetary starvation, including a bold California health-care reform plan and a trailblazing Missouri public works program, and more casualties of what many economists regard as a long-overdue reckoning are inevitable in the months ahead. It’s hard for states to be the laboratories of democracy that U.S. Supreme Court Justice Louis Brandeis famously envisioned if they don’t have enough money to experiment.
History teaches that the economic hardship will pass eventually and that it probably will leave behind a positive policy legacy. After all, such mainstays of the American way of life as Social Security, unemployment insurance and government protection of bank deposits grew out of earlier downturns.
As you will read in these pages, U.S. energy policy and the health-care system are among likely candidates for fundamental restructuring during the current emergency. Despite massive federal deficit spending to stabilize the economy, President Barack Obama remains committed to investing $150 billion in new energy-saving technologies. In a video teleconference with a bipartisan group of governors a few weeks after the November election, Obama said his plan “will strengthen our security and create millions of jobs in the process.”
Another of Obama’s top priorities is an economic stimulus package that would pump money into state treasuries to pay for the reconstruction and repair of roads, bridges and other critical elements of the nation’s infrastructure. Although government agencies now collectively spend about $400 billion annually on the hardware that connects and protects our society, experts estimate that at least $100 billion more could be spent productively. The nation’s social safety net, which is administered state to state in differing ways, also could be subject to a great deal of innovation — certainly it will be tested to an extent that hasn’t happened in recent times, with potentially far-reaching political consequences.
State of the States 2009 is Stateline.org’s best effort to highlight significant state political and policy developments in the past 12 months and chart the likely course of state policy in the year ahead.