Governors Hopeful After Obama Meeting

President-elect Barack Obama in an unprecedented gathering here Tuesday (Dec. 2) enlisted the help of the nation's governors to forge a national economic recovery plan with states as a centerpiece.

"Any true solution will not come from Washington alone," Obama said in remarks released after his nearly two-hour private session with 48 current and incoming governors. "It will come from all of you. It will come from the White House and the State House working together every step of the way."

As a record number of governors convened to meet with a president-elect, they asked for billions of federal dollars to help their states cover rising enrollment in Medicaid, unemployment benefits and the food stamp program.

"Who knows how bad this is going to get," said Pennsylvania Gov. Ed Rendell (D), who chairs the National Governors Association (NGA) and whose state will have cut a half billion dollars from its budget by the end of the year.

"Nearly every governor in this room faces budget cuts this fiscal year," Rendell said during a news conference with other governors after the meeting with Obama and Vice President-elect Joe Biden in Congress Hall, next to historic Independence Hall.

Rendell said the governors did not ask the new president for specific dollar amounts for programs and projects, but NGA has suggested $20 billion a year for two years in federal funds to cover Medicaid, the joint federal-state program that costs $330 billion annually and serves 59 million needy Americans. NGA also is pressing for $136 billion to pay for infrastructure projects that are "ready to go" within 90 days.

While 70 percent of those projects are transportation-related, the list also includes school construction, renewable energy, and water treatment and sewage projects, Rendell said. As NGA chairman, Rendell picked infrastructure as his initiative that he will spotlight during the year.

Republican California Gov. Arnold Schwarzenegger agreed the nation needs to invest in infrastructure, particularly high-speed rail. "It's time we got our act together," he said.

A big reason that states are taking their case directly to Obama is the link between state budgets and the national economy. Economists say state budget cutbacks can exacerbate an economic downturn and actually slow recovery nationally.

States have been feeling the squeeze over the past year, even though it became official only on Dec. 1 that the U.S. economy is indeed in a recession. Unlike the federal government, which can run up deficits, most states must balance their budgets, and when states have to cut spending or raise taxes - as many are doing now - billions of dollars are removed from the nation's economy.

"That is why help for you - everything from direct aid, to countercyclical investments, to benefit programs, to infrastructure investment - will be key parts of our economic plan," Biden told governors in referring to deficits this year or next in 41 states represented at the meeting.

Click here to view the Obama-Biden Transition Project's Flickr slideshow of the Governors' meeting.

Congress in 2003 gave states $10 billion to cover rising Medicaid costs during that downturn and a block grant of another $10 billion. But governors say they fear that this recession will be longer and that states will need more help as demands for their services go up as unemployment increases.

Obama last month directed his economic team to draw up a two-year plan to create 2.5 million jobs patching crumbling infrastructure, modernizing schools and building wind farms, solar panels and fuel-efficient cars. Democratic leaders on Capitol Hill have pledged to have legislation ready for Obama to sign shortly after his Jan. 20 inauguration.

"President-elect Obama is very concerned about making sure we act as quickly as possible in order to prime the pump of demand," Maryland Gov. Martin O'Malley (D) said.

Not all the governors support a federal stimulus plan for states, however. Several Republican governors said they expressed concerns to Obama about doling out billions of dollars to states for infrastructure when the federal government's own debt is nearing $1 trillion. "Can we solve our problems by adding billions of dollars more to our debt?" asked Republican South Carolina Gov. Mark Sanford, a vocal critic of any massive public works program and chairman of the Republican Governors Association.

Vermont Gov. Jim Douglas (R), NGA vice chairman, said he, too, is concerned about the rise in the federal budget deficit, but said deficit spending is necessary during a recession. "We can't make progress against that debt during a time of crisis," he told reporters.

Immediately after the meeting, the Republican Governors Association released a letter asking Obama to avoid further borrowing in any economic recovery plan and to adopt trade and tax policies that reward entrepreneurship and encourage growth. RGA also wants Obama to shelve "card check" legislation - a top priority of organized labor - that would make it easier to organize unions.

Governors of both parties lauded Obama for reaching out to them for ideas. Republican Mississippi Gov. Haley Barbour led the applause when Obama specifically called out to Republican colleagues and pledged "to offer you the same hand of friendship and cooperation that I offer our Democratic governors."

Republican Minnesota Gov. Tim Pawlenty told that he was particularly impressed by the tone Obama set in the meeting. "He ended the meeting by saying `This isn't goodbye. It's hello.' And he committed to keep an open dialogue."

Other Republicans on hand included Florida Gov. Charlie Crist, Louisiana Gov. Bobby Jindal and Alaska Gov. Sarah Palin, who catapulted into the national spotlight when she was picked as presidential candidate John McCain's running mate.

Shifting Economy Keeps States Guessing Govs Host Historic Meeting With Obama