A majority of the nation's governors will meet with President-elect Barack Obama this morning in Philadelphia to press him for a healthy share of the multibillion-dollar economic stimulus legislation his advisers and Democratic congressional leaders are drafting.
With their budgets bleeding red ink, the governors say they will argue that states are not just victims of the recession but also effective engines of economic recovery, capable of quickly delivering increased federal spending on infrastructure projects and social programs.
"By no means are we looking for the federal government to relieve us of our responsibilities," Gov. Rendell, the chairman of the National Governors Association, said during a news conference in Washington yesterday with state leaders, "but we do need help."
Otherwise, Rendell said, "we'll have to just make continuing cuts or raise taxes, both of which will have a deleterious effect on our states' economies."
The bipartisan meeting, scheduled for 10 a.m. at Congress Hall in the Independence National Historical Park, is a political coup for Rendell, who is hosting Obama's first official trip outside Chicago since the election, aside from a brief visit to the White House on Nov. 10.
Organizers expect that 45 governors will attend.
After arriving in Philadelphia last night, Obama met with 28 Democratic governors at the Independence Visitors Center.
Specifically, the governors want a two-year increase in the federal share of the cost of the Medicaid program; federal investments in construction of roads and bridges, mass-transit projects and other infrastructure; an extension of unemployment benefits; and more money for federal food stamps.
States already face revenue shortfalls totaling $40 billion for the 2009 fiscal year, which starts July 1. The NGA and the National Conference of State Legislatures project red ink at least through 2010 as the costs of the recession pile up.
"There's a cascading effect when the economy goes sour," said Vermont Gov. Jim Douglas, a Republican who is cochairman of the NGA.
"The costs often can lag the economic recovery, because it sometimes takes a while for individuals facing family emergencies to apply for food stamps, Medicaid and other benefits they're entitled to," Douglas said. "We're in this for the long haul."
Rendell said that states had an estimated $136 billion worth of infrastructure projects ready to go, and that federal spending could prime the pump while taking care of transportation and other needs that will help the economy's long-term prospects.
"We have seen a lot of federal help go to a lot of organizations over the last few months, but none of that help has produced one new job," Rendell said. He cited estimates that each $1 billion in spending on public-works projects creates 40,000 jobs - in construction and in the industries that supply materials.
"These are not small projects - we're not talking about potholes and curbside repaving," Rendell said. He said the governors had urged Congress to include a "use it or lose it" clause to ensure that states spend the money to stimulate the economy instead of saving it.
Last week, Obama directed his team of economic advisers to develop a stimulus plan designed to save or create 2.5 million jobs during the next two years, an effort that analysts have estimated could cost as much as $700 billion. That is on top of the $700 billion Congress committed to shore up financial institutions and markets.
Obama has said he wants to target some of the proposed new aid directly to state and local governments, though he has not put a number on it. Congressional leaders have said that up to $300 billion of the new spending could be sent to states and municipalities.
New Jersey's Gov. Corzine told reporters yesterday that the governors' wish list could total $600 billion. "The more ready-to-go projects we can put into the ground, the more people we can put to work," he said.
House Speaker Nancy Pelosi (D., Calif.) said yesterday that Democrats would work to have a stimulus package ready for Obama to sign the day he takes office Jan. 20.
The measure is expected to contain many of the features the governors advocate - including cash for infrastructure projects and increased Medicaid aid to the states, along with tax cuts, a temporary increase in food-stamp payments, and investments in renewable-energy initiatives.
"It's going to be about innovation and about the future, about building the jobs of the 21st century," Pelosi said.
Economists generally agree that extended unemployment benefits, expansion of the food-stamp program, and increased aid to states and localities have an immediate beneficial effect during an economic downturn.
"Increasing infrastructure spending would also greatly boost the economy, particularly in the current downturn," Mark Zandi, chief economist of Moody's Economy.com, said in recent testimony to the Senate Budget Committee.
Skeptics, however, say that spending on public works might have merit on its own but that it takes too long to be an effective economic stimulant.