Governor Andrew Cuomo is making a big deal out of the failure of a congressional “super committee” to produce a deal on reducing the federal budget deficit. This is supposed to trigger $1.2 trillion in across-the-board federal budget cuts over a 10-year period beginning in 2013—which, Cuomo said yesterday, could translate into $5 billion in lost federal funding for New York.

Bemoaning “Washington’s inability to get its fiscal house in order,” the governor warned:  “These events, combined with a stagnant national economy and the expanding fiscal crisis in Europe that has led to a sudden and severe decline in revenues for the state, have dramatically changed the fiscal course of the state.”

In reality:

• $5 billion is a small fraction of what the New York State could expect to receive in Medicaid reimbursements alone over the next 10 years under current federal policy. As this articlenotes, Medicaid is exempt from the across-the-board cuts that are supposed to follow the super committee’s failure.
• In the unlikely event that the automatic federal cuts are actually allowed to unfold in the coming decade, the main result will be deeper reductions in defense spending — and New York is one of the least defense-intensive states in the union. There also will be greater reductions in federal aid that directly benefits localities, not states.
• Any conceivable deficit-cutting compromise between the current roster of congressional Democrats and Republicans would feature deeper cuts in Medicare and other health care spending, along with an increase in income taxes on high-income households, both of which would have hit New York harder than most states. This remains the most likely ultimate outcome of Washington’s current deficit dithering, with the precise mix of tax hikes and spending cuts depending on the outcome of the 2012 presidential and congressional elections.

In fact, few congressional observers expected the super committee to meet its goal. This is not a“game changer” for New York, much less some sort of emergency.

Cuomo nonetheless played the day’s big national news story for all it was worth, announcing: “I have asked my Council of Economic and Fiscal Advisors to work with senior members of my administration to draw up an expedited job creation and fiscal stabilization plan. This proposal would be based on the reality that the best way to generate revenue for the state and revitalize our economy is to create jobs.”

It seems the governor is laying the groundwork for some set of major fiscal initiatives, if not an outright change of direction in fiscal policy, to be unveiled officially in his State of the State message in six weeks from now.

Give Cuomo credit for recognizing, as he said in his statement, New York needs a to create jobs. The risk is that, under more urgent political pressure to do something—anything!,  Albany will only invent new ways of destroying jobs–or further screwing up its long-term finances.  Like, for example, the newly reported scheme to tap public pension funds as a source of funding for a new Tappan Zee Bridge.