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Malloy Urges Congress to Raise Debt Ceiling

The following letter from Gov. Dannel Malloy to congressional leaders urges Washington to approve an increase in the federal debt ceiling now. It is addressed to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Speaker of the House John Boehner, and House Minority Leader Nancy Pelosi.

I write to urge Congress to immediately increase the federal government’s statutory borrowing limit. It is imperative that Congress do so to protect the U.S. economy and the fragile, but ongoing economic recovery. Failure to increase the debt ceiling and fulfill the financial obligations already authorized by Congress would do great harm to this nation. For Connecticut, such a failure would result in a serious disruption to our cash flow, negatively affect our access to the capital markets, and harm our local economy. I recognize the critical importance of reducing the nation’s long-term debt and commended the ongoing negotiations to achieve this goal. But in the absence of a balanced, bipartisan agreement, I respectfully request that a debt ceiling increase be enacted without delay.

Once you have done so, I encourage you to continue working with the President on an agreement that will reduce the long-term budget deficit. An agreement should address both spending and revenues, promote economic development and competitiveness, and spare our most vulnerable populations. Further, federal cuts must not disproportionately shift the burden of deficit reduction to either state or local governments. These were my principles when I proposed and enacted a balanced budget that addresses Connecticut’s budget shortfall without one-time gimmicks or cost-shifts to local governments, that promotes economic development, and that preserves core countercyclical programs assisting Connecticut’s most vulnerable populations weather the aftershocks of the Great Recession.

I understand that cuts to mandatory federal spending programs are under consideration. According to press reports, you have targeted $100 billion in federal savings by eliminating state healthcare provider assessments and revising the federal matching rate for Medicaid and CHIP to reduce federal funding. If enacted, these proposals would represent a substantial cost-shift to the states (according to an estimate by the Center for Budget and Policy Priorities, Connecticut would lose $456 million over the first ten years of such a plan) and would damage the Medicaid program, which, of course, is a federal-state partnership to provide vital health care access to low-income and elderly Americans. A better way to reduce overall Medicaid spending would be to enhance the partnership between the federal government and states by better coordinating care to the highest cost populations. For example, Maryland Governor Martin O’Malley has outlined a way to achieve approximately $100 billion in real federal savings by improving how we serve “dual eligibles.” This proposal, laid out in the accompanying white paper, would leverage the outstanding pilot program recently announced by the U.S. Department of Health and Human Services and create a more sustainable approach to generating $100 billion savings over 10 years.

I’m also concerned about possible reductions in federal funding for graduate medical education. In light of the nation’s significant shortfall of physicians, we must encourage bright students to enter this profession. To that end, as part of our state’s historic investment in Bioscience at the University of Connecticut Health Center (UCHC), the medical school’s enrollment will grow by 30%. However, reduced funding for graduate medical education would not only jeopardize these efforts, but also drive up the delivery costs for the same amount of quality health care across Connecticut. If reports are true that a sixty percent cut to graduate medical education is under consideration, such cuts would result in a loss of more than $42 million to all of the UCHC teaching partners, harm the health of citizens we serve, and harm the health of our economy. Support for medical education is a critical investment and I urge you to reject cuts in this area.

I understand the challenge facing Congress and President Obama in restoring fiscal balance to our long-term federal budget. It is a monumental and imperative task. But it must be done reasonably, in partnership with states, and in a way that accelerates job growth, enhances the economic competitiveness of our nation, and the welfare of our citizens. I urge you to consult governors as you continue negotiations. But, in the meantime, you must increase the debt ceiling without delay to avoid default and the concomitant harm to the United States that would result.

Sincerely,

Dannel P. Malloy

Governor

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