http://www.washingtonpost.com/wp-dyn/content/article/2011/02/27/AR2011022702931.html

Even those who say Obama needs to secure significant new federal spending to help states avoid cutting health care and education programs and laying off workers acknowledge the limits.

"We know there is not a great appetite for major new funding, but there is a real short-term crisis here," said Charles Loveless, the legislative director of a powerful labor union, the American Federation of State, County and Municipal Employees.

Eventually, Obama could also come under pressure from state officials and the financial industry to provide emergency aid to states and municipalities if they can't pay off their debts.

Moody's, the credit rating agency, said last week that the "municipal market faces credit pressure not seen since the Great Depression." Some prominent analysts have warned that states and localities may not be able to pay hundreds of billions of dollars in debts. Meanwhile, politicians in Washington are debating whether states should be allowed to declare bankruptcy.