Fineman: Inside Obama's Meeting With Governors

Ben Franklin invented the fire-fighting cooperative here in Philadelphia in the 18th century. But now his beloved and still gracious city has lost so much tax revenue in the Great Recession that it is shuttering firehouses from Northern Liberties to South Street.

So this was an appropriate place for Barack Obama to come to listen to the nation's governors tell him horror stories about their state budgets, which are falling deeper and deeper into the red.

Everybody wants money from the feds in general and the president-elect in particular. One day it's the banks; then it's the auto companies. Now it's the states.

It's not yet Christmas, and Obama was not elected to be Santa Claus. But the talk leading up to Inauguration Day has assumed the air of a Dickensian orphanage, with the inmates shouting, "more please!"

They are entitled: they are starving.

By state law and by state constitution in most places, governors must balance their own budgets. And unlike the federal government (which has no balanced-budget law with real teeth in it), the states can't print their own money to cover their bills and debts.

They are broke, as are an increasing number of cities and counties. That destitution, in turn, will have consequences for Americans everywhere—in the form of higher medical bills, tuition fees for schools and colleges, reduced social and community services (such as libraries) and higher taxes and fees of all kinds.

According to the National Governors Association, the states could be as much as $80 billion short of cash this fiscal year (which ends next July) and more than $100 billion short next year. And that is out of a collective budget of $1.2 trillion in all the states.

To discuss this gathering catastrophe, the president-elect—former community organizer and state legislator—asked to meet with and hear the concerns of the nation's governors. As far as any one could tell, no president-elect had ever asked for such a meeting, at least not this early in his pre-presidency.

The chairman of the governors' group, Pennsylvania Gov. Ed Rendell, is a proud Philly guy. So he set the closed-door meeting for Congress Hall, next door to Independence Hall. There, from 1790 to 1800, the new Congress met until the capital was moved to Washington, D.C.

The governors sat at desks in what used to be the House of Representatives, and talked with Obama and Vice President-elect Joe Biden in detail for nearly two hours in a closed-door session.

It was a polite but fairly grim session, I am told by participants. Obama was "regal, elegant and very gracious," said Republican Gov. Mark Sanford of South Carolina. But the numbers that prompted the meeting were so bleak that there was nothing to laugh about.

The governors made a three-part pitch that most (but not all) of them agreed on:

Obama listened carefully and politely to all of this, but made no hard-and-fast promises, according to Rendell. "There are no guarantees, but I think it is fair to say that the president-elect and the vice-president elect are committed to these basic ideas and proposals. The final details of them is anybody's guess," Rendell added.

Here's my guess: once he becomes president, Obama is going to ask the Congress to give the governors pretty much what they want, as long as they make good on their own promises—reiterated to Obama at the meeting—to share the burden by cutting state spending and raising state revenues in their own legislatures.

Obama can't save every firehouse in Philly, but Rendell & Co. will get most of what they want.