Pawlenty cool to stimulus proposals

WASHINGTON - Minnesota Gov. Tim Pawlenty, meeting Tuesday with President-elect Barack Obama, distanced himself from a bipartisan group of governors pressing for federal funds to alleviate state budget shortfalls and boost local economies.

The meeting in Philadelphia came as Minnesota braces for bad news in the two-year deficit forecast due Thursday.

Despite grim budget forecasts and implications for schools, roads, health care and taxes, Pawlenty expressed skepticism about a federal stimulus package being considered by Obama and Democrats in Congress, which includes extra spending for infrastructure projects and Medicaid health programs.

His view on Medicaid is a turnaround from his position as chairman of the National Governors Association in January, when he signed a letter seeking more health care funding as part of a prior stimulus package.

"All the money that people are asking for from the federal government, and the money they are sending out, is money they don't have," Pawlenty said Tuesday.

It was the first meeting between a president-elect and the governors association, pressing to carve out a $176 billion slice of a stimulus bill that could exceed $500 billion.

The recession has prompted 30 states to identify shortfalls totaling more than $30 billion, the association said.

Douglas and California Gov. Arnold Schwarzenegger have called for an economic recovery strategy to include more money for Medicaid, one of the forces in states' budget woes.

Pawlenty says he will "reserve judgment" to see the new administration's final plan. He expressed doubts about Democrats' plan to bolster spending on public works. Pawlenty said such spending "doesn't do anything" for the looming budget deficit in Minnesota.

Among Democrats pushing such spending is U.S. Rep. Jim Oberstar of Minnesota, who unveiled a $45 billion proposal Tuesday for highways, bridges and other large public works.

Oberstar, chairman of the House Transportation and Infrastructure Committee, said the "Rebuild America" plan would create or sustain 1.3 million jobs and spin off $223 billion in economic activity.

The plan would mean $536 million for Minnesota, including $293 million for 30 highway and bridge projects. He estimated Minnesotans would get more than 7,000 jobs.

Minnesota Democrats also took issue with Pawlenty over additional Medicaid spending, which they say could bring the state $362 million to $393 million in extra health care funds.

"I don't think we're in any position to say no to anyone who wants to help us in some way," said Minnesota House Speaker Margaret Anderson Kelliher.

The problem, Pawlenty told reporters, is that an infusion of federal money without cost-cutting reforms could cost the state more in the long run.

Pawlenty's proposals have been taken by some health care advocates to mean tightening eligibility for the $4 billion-a-year Medicaid program in Minnesota.

"It's an outrageous idea that you would take federal money intended to keep people in health care and use it instead to cut them off," said Steve Francisco, federal policy director for the Minnesota Budget Project of the Minnesota Council of Nonprofits.

"We're going to need action, and we're going to need action swiftly," he told the governors.

In an effort to win bipartisan support, he appealed to Republicans: "We're not going to be hampered by ideology in trying to get this country back on track."

Obama will inherit more than $10 trillion in debt. Critics say it makes little sense to shift expense from states to the federal government. Republicans in Congress caution against a government spending spree.

Either way, Pawlenty suggested that he has not backed off his aversion to new taxes. "Even Barack Obama is saying tax increases should be delayed," he said. "So that should tell you something."