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The federal bailout: Digging a deeper hole

| Monday, June 2, 2003

A couple up to their necks in debt solicits help from a credit counselor. But instead of cutting up their credit cards, the counselor gives them $1 million and tells them to have a nice day.

Ridiculous• No more so than the federal government's $20 billion bailout of the states. The feds haven't provided a hand up. Rather, Big Government has supplied a steam shovel.

Under the tutelage of Gov. Ed Rendell, Pennsylvania goes to the head of the class in backward economics. Rather than erase his 34 percent income tax hike -- and show some real economic chops by reducing state taxes on individuals and businesses -- Fast Eddie already has tagged the expected $897 million federal windfall. He plans to use it to restore cuts in human service programs; approximately $392 million will be used in the fiscal year beginning July 1, and the remainder will be applied next year.

Rendell says the federal funds should be used in "a responsible manner" to bridge the budget gap. How• By returning the commonwealth to the same levels of spending and fiscal ineptitude•

Lawmakers and Rendell will negotiate to determine which state programs are worthy of resumption. Don't be surprised if cash is found to stoke Pennsylvania's runaway locomotive: Community Revitalization Program grants -- millions of dollars loosely designated to curry political favor.

The governor is right on one point: The federal infusion doesn't solve the state's fiscal problems. By the same token, a person looking up from a deep hole should have the sense to stop digging.

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