Beijing
Huge deficit in states drags down US economy
Xinhuanet 2003-07-28 23:46


  WASHINGTON, July 28 (Xinhuanet) -- Having already stripped the US economic growth, the budget crises in many US states are now beginning to drag down the national economy, prolonging the weak, jobless US economic recovery.

  The states in the United States have gradually cut between 20 billion to 40 billion dollars from their spending over the past two years and billions more in cutbacks are coming in the new fiscal year started on July 1 because of huge state deficit, the New York Times reported Monday.

  In California alone, a tentative budget deal will presumably require the state to rid itself of at least 8 billion US dollars in current spending, with the cuts likely to fall most heavily on education and aid to the poor, the paper said.

  In contrast to the fact several year ago when the US states were still a plus for the national economy, the deficit has made US states a net minus for the US national economy in the past two years.

  "It is reasonable to think that the response by the states to the fiscal crisis is taking at least half a percentage point out of the growth rate of the national economy," said Nicholas Johnson,director of the State Fiscal Project at the Center on Budget and Policy Priorities in Washington. Enditem

  


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