Spending cuts by state and local governments from New York to California may act as a drag on the economy into 2011, only the second time in more than a half century that such reductions have restricted growth for three consecutive years.
States face a cumulative budget gap of $127.4 billion as 46 prepare for the start of their fiscal year on July 1, according to a report this month by the National Governors Association and the National Association of State Budget Officers. They will have to fill that hole largely on their own, as aid from the federal government under programs including President Barack Obama’s $787 billion stimulus package starts to wind down.
State and local cutbacks may trim growth by about a quarter percentage point in 2010 and 2011 after shaving it by 0.02 point in 2010, said Mark Zandi, chief economist at Moody’s Analytics Inc. He also sees the governments lopping payrolls by 200,000 during the next year after reducing them by 190,000 in the 12 months through May.
“The budget cutting that is dead ahead will be a significant impediment to economic growth later this year into 2011,” he said in an interview.
This was precisely the argument that Sanford of South Carolina and Palin of Alaska made as governors – accepting federal money would make the states dependent on federal largess which would have an expiration date.
Double dip, here we come.
actually, robroy, by not accepting federal money, the depression would have just gotten deeper. We underestimated what was necessary to stimulate demand. Better open up Keynes.
“Better open up Keynes.”
Er, OK.
http://www.youtube.com/watch?v=d0nERTFo-Sk
How far we’ve come. Under the Articles of Confederation the Feds starved for cash. Under the perverted current implementation of the Constitution the states starve for cash. And neither the Feds nor the states will consider just budgeting within their means without resorting to fiscal chicanery. We are circling the drain.
RE: “We underestimated what was necessary to stimulate demand.”
Heh.
No — the collectivists didn’t understand that no matter how much money they threw it would not “stimulate” those sectors which they wanted to be stimulated. And so now they are continuing their proven utterly failed practice of throwing money down a rat hole to continue funding other states — which, again, will not “stimulate” the small businesses with which I work and with which millions of other Americans work.
I suspect that the economists advising Obama — like John Wilkins — have not a clue about corporate business work. They simply are ignorant — it would be like my trying to coach a football team and saying things like “we underestimated what it would take to get a touchdown in this game — let us practice our posture even more diligently.”
Sarah is right. If you want to stimulate the economy: 1. get rid of capital gains taxes; 2. lower the corporate income tax level to 21%; 3. allow capitalization of new equipment and buildings; 3. reduce the individual tax rates across the board. The problem with Obama and his administration is they think they ought to be able to spend your money, and they think they know how to do it better than you do. I can’t find one person in his inner circle who actually ever did something for a living. Lord knows, he never has had a real job. That’s why the Gulf mess has turned into a disaster–they are ideologs not doers. The depression of the 1930’s is a perfect example of how the government can’t get you out of a depression. And by the way, Keynes would be rolling over in his grave if he knew how modern economies work. I’m no fan of Keynes, but a awful lot of what is attributed to him, he never said. One positive thing you can say for Keynes is when he saw what Lloyd George and the French were putting in the Treaty of Versailles, he walked out of the talks and later said the terms would eventually cause a world wide economic downturn and another war.
Let’s look at how Government spending works. Pretend you have a swimming pool in the backyard. At one end you scoop up a bucket of water. Then you run to the other end, along the way some water spills out. Then you throw the bucket of water into the other end of the pool. You repeat this a trillion times.
Then you take a break and wonder why the water in the pool is not rising.
#6 David, all those things would surely jump-start the economy, spur consumption (70% of the economy), and put more money in people’s pockets.
Fundamentally though, we have far more Fed Gov’t than we should. To attack the debt of this nation, we need to pare the Fed Gov’t back down to those things that are delegated to it by the Constitution and send all other issues to the states.
It is a most interesting exercise to take the FY2011 budget proposal (which will never become a budget by the way) and cut it down to what the Constitution allows. It is quite small and manageable.
In fact, you would discover that you don’t need a full-time Congress in DC……..just not that much for them to do. They would have to live back here with us unwashed and really see what constituents want.
#8–Thanks Captain. Actually I wouldn’t “discover” that at all. I am fully aware of what you say and totally agree. Most of what the Federal Government does happened by inertia from the Depression and the Great Society. The commerce clause was used by the SCt to skirt the constitution and now we are in a screwed up mess. I personally believe one of the best ways to begin to fix the mess is to repeal the 14th Amendment. But, we are in total agreement about the new “nobility” of the Congress and unconstitutional spending.
Why do we only hear from the collectivist who bleed from all of our hearts and are willing to borrow endlessly to solve the worlds problems and the whining separatist, who perceive themselves as shackled to a bunch of less deserving lazy do nothings, and who really are only interested in what’s best for them.
God hear the prayer of a real small businessman. Bring back the people who understood that hard work, a willingness to shoulder one’s share of the burden plus a little more for those who cannot, and a vision of America as one people who will succeed or fail together are all necessary if our way of life is to survive.
I believe America has lost the input of the working class people I grew up with. Doing physical labor for a living brings wisdom. Unfortunately we no longer do that in this country as those jobs were outsourced, largely by the separatists seeking cheap goods. Working people saw America from the middle, they understood life is hard and we must work to survive. They also understood that some cannot work and that together we can make life not unbearable for those people. Finally they understood that some people are perfectly willing to exploit the poor and uneducated for their own personal wealth, and use that wealth to corrupt government. They understood from personal experience the concentration of wealth and power into the hands of too few will threaten democratic rule just as surely as will Communism. Without their stabilizing influence I think we have lost our center and our way.
America under the total control of the collectivists will turn into Western Europe, a modern socialist state. America under the total control of the separatists will revert to the America of the late 1800s. A society of haves and have nots where both rights and access to government are commodities to be sold in the market place. Much like modern Russia is becoming after the fall of the communists.
I believe those who love this country, every part of it, and see her as unique in the world want neither of those futures. But I’m just not sure there are many of us left.
#10–Somebody sent me a sign seen at a rally recently saying “Don’t Redistribute My Wealth, Distribute My Work Ethic”. That pretty much says it all.
#10 – why should the wealthy trust in the working class? They are the ones who supported unions, the weekend, and government “collectivist” ideas such as the GI bill and public universities.
In my town there are several small businesses with flyers in their windows saying “this business is supported by members of the (x) union.” The economic fact is that private businesses have people from public institutions spend money there. They go to diners. They buy cars. They have their cars fixed. They have side jobs. They fund the graphic design for their favorite charities. Teachers, policemen, firemen, contractors of the state, and DMV bureaucrats spend money in small businesses. Businesses make a profit from the spending that governments, and their employees make. This is called the multiplier effect.
Sarah, in her own kind of “deconstructionism” calls this “collectivist” which historically meant a certain kind of rounding up of people into forced gathered labor for the state. She decides to redefine the term for her own ideological tastes. It’s got little to do with history, although I suspect there are some who think sharing itself reeks of something sinister and dangerous. (“Can I borrow some eggs?” says one needing some eggs. “No, as you were too lazy and irresponsible to plan for the fact you don’t have any. Do you expect us to always support you? Think of the small businessman who was always prepared!”)
What is also interesting is that we’ve been reducing taxes for the last 30 years (well, perhaps increasing some payroll taxes), and wages have not gone up. Profits have. People have been working harder. More two-family incomes. It doesn’t seem to have had the magic effect people have desired. Although personally, I would agree there are less regressive, fairer ways to tax individuals that reward labor while punishing greed.
I admit I’m amused at all those who think that the government is awful, when so many jobs are supported by our investment in the military. It’s socialism, just through the army. And it does have a remarkable impact upon our economy.
RE: “Sarah, in her own kind of “deconstructionism†calls this “collectivist†which historically meant a certain kind of rounding up of people into forced gathered labor for the state. She decides to redefine the term for her own ideological tastes.”
Now now John — don’t go letting people know how angry those two words get you when used to accurately describe your ideology. ; > )
RE: “. . . although I suspect there are some who think sharing itself reeks of something sinister and dangerous.”
Yeh — cause everybody knows that “sharing” = government taking individuals’ money by force. Sweet — how like a TEC revisionist priest to define “sharing” that way. Maybe you could define “pledging” that way — maybe “pledging” = vestry taking individual parishioners’ money by force. Heh.
RE: “I admit I’m amused at all those who think that the government is awful, when so many jobs are supported by our investment in the military. It’s socialism, just through the army.”
Nope — it’s called living under the Constitution, which carefully defined precisely which activities were to be pursued by the Federal government.
Deconstructionism again — and incoherent, too. My those sermons must be lovely for the parishioners to hear.