I’m starting to review the Oregon state budget and realizing how spurious the claim is that balanced budget requirements are why we should not worry much about the state of many state budgets. Many crises are looming and I’m tired of advocates simply working to protect *their* special interests. Recipients of public funding should come to the table with more effective use of their tax share or they should be shown the door.
First, most states effectively rename deficits as “shortfalls”, often scrambling to balance things late in a two year budget process. Far more important however is the fact that about half of the “total revenues” in Oregon (and I asssume in most other states), comes from the federal government in the form of grants and other federal to state payments. Now, the federal government *can* run a deficit, and has been choosing to increase that deficit massively since Bill Clinton left office. Therefore a LOT of the money we spend as a state is in fact “borrowed money”, borrowed at the federal level from … wait for it … our children! Thanks kids and young folks for funding the reckless spending of the older generations. Ironically you aren’t participating much in politics and many of you don’t even realize what’s going on right now as we spend and spend … your money.
Caveat: Most economists agree that the economy is fragile right now and some major spending by government is needed to continue the bailout and stimulus strategies that appear to have worked well. I’m not disputing that, but I am suggesting that there will be hell to pay if we don’t start managing government spending far more responsibly than we have in some time. This means cutting both entitlements and defense and – unless very deep cuts are made soon – raising taxes too. People who think we can balance things without either huge cuts or substantial tax increases are just foolish. There’s no easy path after decades of reckless spending.