Obama vs. Schwarzenegger: White House Threatens to Rescind Stimulus Funds

Arnold Schwarzenegger has been one of the prominent Republican defenders of President Obama's stimulus plan. He's called the California governor "one of the great innovators of state government" and "an outstanding partner with our administration." But their relationship has hit a rough patch.


The L.A. Times reports that the Obama administration is threatening to rescind stimulus billions of dollars in federal stimulus funds if wage cuts to unionized home healthcare workers are not restored.

Schwarzenegger's office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

The Service Employees International Union, which represents the workers, requested the opinion from Obama's Department of Health and Human Services.

"The Obama Administration has made it clear that the State cannot cut the homecare workers' wages. Now we need our counties to follow suit and take all the cuts off the table," said SEIU Executive Vice President and SEIU UHW Trustee, Eliseo Medina.

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