Budget -- Rough Patch for AMT?: Senate Budget Committee Chairman Kent Conrad (D-ND) said yesterday that he'd probably leave an AMT patch provision (est. cost $75 bn.) out of budget reconciliation instructions this year in order to facilitate both PAYGO compliance with a patch and passage of a budget... By putting tax reconciliation instructions that could be used for an AMT patch into budget resolution, a later bill to patch the AMT with offsets would require only 51 votes to pass, rather than the usual 60 votes required to avoid a filibuster. State of Anxiety, Pt. I: Here's where the recession meets the road. More than half of the states now anticipate budget problems, according to a Center on Budget analysis of state fiscal conditions. The analysis shows that 20 states project budget gaps for 2009. The combined budget shortfall for these 20 states in 2009 is at least $34 billion. State of Anxiety, Pt. II: The Bush administration is poised to issue a slew of new Medicaid rules that would up the $12 billion in costs for the program to the states — and there may be little that the financially strapped states can do about it... Under consideration, for example, is a plan to curtail federal reimbursement for ancillary services states provide to Medicaid patients under case-management plans, such as assistance finding housing or paying utility bills. The administration says some services — many non-medical in nature — are outside the scope of Medicaid. Expect some push-back from the Senate and, ultimately, a compromise bill. Earmarks -- May He who is without Sin: President Bush cast aspersions on Congress in his State of the Union speech for its apparent failure on earmarks and added a veto threat: Last year, I asked you to voluntarily cut the number and cost of earmarks in half. I also asked you to stop slipping earmarks into committee reports that never even come to a vote. Unfortunately, neither goal was met. So this time, if you send me an appropriations bill that does not cut the number and cost of earmarks in half, I'll send it back to you with my veto. But, as the New York Times points out, in his new budget, Bush has requested money for thousands of similar projects, including $6.5 million for research in Wyoming on the "fundamental properties of asphalt... The White House defines 'earmarks' in a way that applies only to projects designated by Congress, not to those requested by the administration.