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States need deep cutbacks New York is not alone in crisis that should lead to major changes

When the bank holds 10 bad mortgages, it's the homeowners' problem. When the bank holds 10,000 bad mortgages, it's the bank's problem.

And when one state is facing a budget crisis, it's the governor's problem. When a dozen or more states are facing a budget crisis, it's the president's problem.

These days, it is not just New York, with its multibillion budget deficit, that is in trouble. And that's lucky for New York politicians because, had it not been for all the other states sinking in the same boat, it would have been even harder to pass the $787 billion stimulus package that President Obama tramped all the way out to Denver to sign the other day.

Whatever else it is in terms of policy, pork or too little or too much, it is a package that should help New York and other states cover the kind of expenses that go up at the same time, and for the same reason, that their revenue goes down -- health care for the poor and unemployed, education improvements made suddenly less affordable, roads and bridges for states that could not otherwise pay for infrastructure upgrades needed for economic development and basic safety.

A few snapshots:

* California was stuck in a $42 billion budget hole for more than three months, and faced a statewide shutdown of all public works projects as well as layoffs for as many as 20,000 state employees. Its Legislature finally acted to close the deficit -- with a 1 percent hike in the sales tax, a quarter-percent surcharge on income tax rates for the next two years, fee hikes, $5 billion in lottery-back bond borrowing, a $13 billion spending cut this year and a $96.3 billion spending cap next year.

* Kansas came within a few days of missing payroll, and suspending tax refunds, before the Democratic governor and Republican-controlled Legislature crafted a deal to cut the budget and get accounts flowing.

* Wisconsin's governor wants a mix of tax hikes, spending cuts and federal funds to make up a $5.7 billion shortfall.

* New Jersey is putting state workers on furlough and threatening big layoffs if public employee unions don't agree to wage freezes.

* Virginia is just glad that $1 billion from the federal stimulus will take the edge off of its $3.7 billion deficit.

Etc., etc., etc. Currently, 43 states are looking at deficits.

Many of these woes, especially in New York and California, are self-inflicted. They are largely the result of years of overspending and the legacy of union contracts that greatly inflate the cost of public services through staggeringly expensive pension and retiree health benefits.

At the same time, it is not the fault of David A. Paterson or Arnold Schwarzenegger that the national economy is in recession, that the Empire State's Wall Street and the Golden Coast's housing market held hands and jumped into the volcano of federal deregulation together, or that years of dithering and denial on the part of national leaders have left all big employers, not just the states, with health care costs that would choke the best-managed operations.

Under these circumstances, and with plenty of blame to go around, huge federal assistance to the states is justified. And to those who worry that a big enough bailout from Uncle Sugar will allow the states to put off the internal restructuring that they so horribly need, we say: No bailout can be that big.

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