Memo Highlights Good News and Bad News of Federal Debt Deal

The Washington Post reports that a memo circulating in the Governor’s administration lists the “good news” and “bad news” for Maryland from the federal debt deal.  The memo highlights many of the same issues raised in two separate August 2 blog posts, one on credit ratings and the other on the effect of the debt deal. From the memo:

Among the good news: There will be do direct cuts to Medicaid unless proposed by the bipartisan commission. “Since Medicaid represents about half of the federal funding in the State budget, this is a big win for the State,” the memo said.

It also noted that the plan does not rely exclusively on cuts to domestic spending and that averting default on the federal level reduces the likelihood of a downgrade in U.S. credit, which in turn improves the chances that Maryland will maintain its AAA bond rating from all three agencies.

Caps on domestic spending are among the “bad news.”

“It is unclear what programs will ultimately be cut, but clean water and energy assistance programs were targeted by House Republicans and in some cases the President in budget discussions earlier this year,” the memo said. “The State relies heavily on federal funding to restore the Bay and provide low-income families with energy assistance.”

Other reductions to domestic spending could “impair implementation of health reform,” and the commission could also recommend deep cuts to Medicaid, the memo noted.

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