Jewish World Review May 28, 2003 / 26 Iyar, 5763
Peter A. Brown
Bail out states? It's not D.C.'s job
http://www.jewishworldreview.com | Lost in the fight over President Bush's tax cut were any questions about the wisdom of bailing states out of the fiscal holes that they largely dug for themselves. Yes, part of the deficits from Austin to Albany stem from homeland-security costs ordered by Congress. Mostly, though, the record red ink results from state lawmakers spending too much - even more proportionally than Congress - during the good times.
The $20 billion for the states tucked into the $300 billion-plus federal tax cut is unwise because it will reduce the pressure on the states to put their own houses in order. The question of whether the feds should help states avoid tough choices about what programs are worth funding is a microcosm of the national debate on government's role.
Democrats charge that Republicans want to roll back Franklin D. Roosevelt's New Deal, which created Social Security and reversed the notion that government should let the marketplace operate with little or no oversight.
Actually, the change in public sentiment against an overreaching government role in the economy that began with Ronald Reagan's 1980 election and led to the Republican takeover of Congress and the presidency is more an effort to curb the excesses of Lyndon B. Johnson's Great Society.
LBJ defined his increased government benefits as entitlements and sadly created a societal mind-set that citizens are owed by their government, not, as John F. Kennedy so eloquently put it, the other way around.
That's why it matters how states deal with their deficit problems.
Once again, congressional Democrats want increased revenues in state coffers, either through new taxes or federal aid. A handful of votes from Republican moderates in Congress forced the $20 billion for states into the final legislation. Its supporters wrongly assume that Congress must save states from deciding what they want enough to pay for themselves.
Those decisions have been a long time in coming.
In the booming 1990s, when excesses were rife, state government spending increased at a higher rate than tax revenues - and, at a rate almost double that of the federal government.
Had states decided in 1990 to increase spending only at the same rate as the feds, no state would face shortfalls today. In addition, there would be enough cash to give each U.S. household $525, said Brian Riedl of the Heritage Foundation.
In tough times, tax revenues fall and spending grows. Since 1998, outstanding state and local debt has increased 26 percent, while over the same period the federal debt shrank, according to the Financial Times, a British business newspaper.
The lesson is that per-capita shortfalls are smaller in states with lower taxes because they didn't create larger needs to begin with.
In Florida, with no income tax and generally low levies, the deficit per resident is a fraction of fellow megastates California and New York, where candidates vie for votes by playing "let's make a deal."
And guess what. Florida lawmakers won't be raising taxes - although they will increase some "user fees" - while New York and California and other tax-friendly states will be raising many billions in levies.
For years, Democrats have charged that Republicans want to cut taxes to shrink government's role in American life. Actually, Republicans want to cut taxes so people can keep more of their own money. A nice benefit is that doing so reduces the cash in government coffers and forces politicians to set priorities.
That's why, as Grover Norquist, who heads the anti-tax Americans for Tax Reform, wrote in December's The American Enterprise: "What Mae West said of sex is true about tax cuts. Even the bad tax cuts are good."
And, in times like these, when government revenues don't match program commitments, states and localities should choose exactly how they want to spend tax dollars.
What is so bad about that? Had states gotten the message about spending controls before, they wouldn't be in such dire straits now.
If some states want to spend more money than do others, that is their right. But they need to make that decision overtly and not depend on Washington (and the residents of other states whose taxes go to D.C., too) to bail them out.
Americans can vote with their feet about where they want to live, what their taxes will be and how government spends their money. It's the American way.