Monday, July 28, 2003

Forget The Red/Blue State Divide; They're All Red Ink States Now

It's taken a while, but the big guys, like the NYTimes have finally noticed:

Just three years ago, the states were still a plus for the economy. While the private sector had begun to limp, state spending had remained strong and so had revenues, despite cuts in tax rates in several states.

Today the opposite is happening, and that makes the states a net minus for the national economy. Without that reversal, some economists say, the economy would probably be growing at an annual rate of more than 3 percent, enough to create jobs rather than eliminate them.


The cuts in state spending are just starting to be felt, with the impact landing disproportionately on the poor. "We have been shifting a lot of spending for social services from the feds to the states," said Robert M. Solow, an economist at the Massachusetts Institute of Technology and a Nobel laureate. "And that means the cuts that are taking place are hurting people at the bottom of the income distribution."

Not just the poor, though.

Does this administration even get that governtment workers pay taxes too, that they make purchases, and all those other activities that stimulate an economy? Or that kids who get kindegarten cut out from under them aren't ever going to be four or five years old again?

Has anyone even bothered to tell Bush that state revenues are tied to Federal tax rates, so those Bush tax cuts have meant reduced revenues for many states, especially for states with progressive income taxes. Whoops. Better not clue him into that one.

All of this was avoidable: Anyone remember revenue sharing? And avoiding it would have helped avoid this anemic recovery we're in. Cripes! This administration has figured out how to make lemons out of lemonade and thinks it's a good thing.

Read the whole article, ane then weep.