EDITORIAL: Don't hold up federal Medicaid money

With New York bleeding red ink and pathologically late to pass a budget, Washington shouldn't blow an additional $1.1 billion hole in the state's finances. But that's what will happen unless Congress extends the increase in Medicaid matching funds it granted in last year's stimulus bill.

Gov. David A. Paterson, and officials of most other states, prematurely counted money from the six-month extension in their 2010-2011 budgets. It seemed like a sure thing. Now it isn't. Congress has grown wary of deficit spending, so the House dropped the $24-billion, six-month Medicaid extension from a modest stimulus bill it passed last month. Senate leaders are scrambling in search of the votes needed to pass a similar bill, but with the Medicaid money included.

Washington should certainly be mindful of rising red ink. A credible, long-term plan to rein in borrowing is a must. It will have to include changes in revenue and spending for big ticket items like Social Security, Medicare and national defense, because that's where the bulk of federal money goes. But with the economic recovery still alarmingly fragile, this is no time to allow jobless benefits and small-business tax cuts to lapse, or to roll back Medicaid funding for the states.

New York's wasteful Medicaid program has to be reformed. But that won't happen in time to cover an additional $1.1-billion shortfall in a budget $9.2 billion in the hole. Washington should buy time for New York, and the state should use it wisely. hN