I wrote much longer response on the current economic plans in another thread here, "Are you glad you voted for him?..." I think it was called. Read that as well as the following.

Our current dire situation at both the federal and state level is the result of a dramatic slowing of the economy. The states can't "print money" like the federal government because state constitutions prohibit deficit spending. If revenues decline, states have no alternative except to cut spending. The problem is even worse for the states. If they desired to start major infrastructure projects to create employment, increase tax revenues, re-starting their local economies, with the current freeze-up of the credit markets, there are virtually no buyers for the state or local revenue bonds that they would use to fund the projects. And there are certainly no buyers at all for state or local bonds, the proceeds of which might be used for short-term operating expenses.

The bottom line is the the federal government has to provide the solution to the economic problem. The federal government is not constrained by prohibitions on deficit spending--we would have all been much better off if the Congress and administration in 2001 hadn't permitted the PayGo requirement of the federal budget expire, but that's another story. The federal government can create huge amounts of additional debt--essentaily "printing money" in an effort to get the economy re-started. Their grants will flow to the states and localities and hopefully will have the desired effect of reducing unemployment and re-starting local and state economies.