Senate passes Medicaid assistance bill; House to return for vote

The Senate approved the $26 billion state-aid package on Thursday afternoon that will provide funding for Medicaid and teachers pay and other public services, The Wall Street Journal reports. "The Senate voted 61-39 to approve the measure, with just two Republicans joining with every single Democrat to vote in favor of the legislation." But, even as Democrats secured a key victory for teachers and public workers - a core constituency - they also slapped much of the bill on multinational U.S. companies that will have to pay higher corporate taxes. The Medicaid relief is worth $16 billion to states and will extend increased federal funding set to expire at the end of this year through the first six months of 2011 (Boles, 8/5).

The Associated Press: The passage of the bill "caps months of effort by governors of both parties, public employee unions and others seeking to extend programs enacted in last year's economic stimulus law. That measure provided budget relief to states and local school districts hurt by slumping tax revenues as the U.S. economy has struggled to emerge from recession. … Advocates said the measure would stop the layoffs of perhaps 300,000 teachers, firefighters, police officers, and other public employees" (Taylor, 8/5).

Bloomberg: For many states, the money comes at a critical time. "Dozens of states assumed Congress would provide the additional Medicaid funding when they drew up their budgets, so a failure to approve the aid would exacerbate state shortfalls projected to total $84 billion nationwide, according to the National Conference of State Legislatures." Unlike Washington, state governments must balance their budgets. But, the crackdown on foreign tax credits for multinational corporations drew the opposition of the U.S. Chamber of Commerce. Meanwhile, in anticipation of House action, House Minority Leader John Boehner, an Ohio Republican, signaled his colleagues will oppose the measure next week. He accused Democrats yesterday of 'scampering back to Washington to push through more special-interest bailouts and job-killing tax hikes''' (Faler, 8/5).

Politico: The House Rules Committee is expected to take up the measure as soon as Monday in preparation for a floor debate, even though the House has already departed for its August recess. "Republicans ridiculed the spectacle of Speaker Nancy Pelosi (D-Calif.) calling back lawmakers from their recess to deal with the issue. But having found sufficient offsets to pay for the package, Democrats argued that the bill is a 'common-sense' solution to help states and cities cope with still depressed revenues resulting from the continued housing crisis and slow economic recovery" (Rogers, 8/5).

Reuters: "Democrats facing a wave of anti-Washington anger hope it will convince voters going to the polls on Nov. 2 of their commitment to bring down the U.S. unemployment rate, which is near 10 percent. ... Although states have been begging for the Medicaid money, they are wary of the teachers' fund as it requires them to keep education spending at 2008 levels, which many cannot afford" (Lambert and Cowan, 8/5).

Kaiser Health News tracked this morning's news coverage in advance of the Senate vote as well as how the additional Medicaid funds will impact state budgets.