For states, debt deal still leaves lots of uncertainty

The deal to raise the debt ceiling reached by President Obama and Congressional leaders averts the immediate crisis, John Gramlich and Melissa Maynard report at, but it leaves governors wondering exactly what kind of pain their states will face over the next decade.

While the deal calls for $917 billion in deficit reduction through caps on discretionary spending over the next 10 years, and another $1.5 trillion to be found by a special committee, no one knows just how the reductions will be implemented and what effect they will have on funding to states.

One bit of good news: The agreement appears to spare Medicaid–the largest item in most state budgets–from immediate cuts. That doesn’t mean the special committee might not recommend reductions in the program, though. Gov. Dannel P. Malloy said significant Medicaid cuts would by “devastating” to states.