I don't see why the aggregate state funding gap is not numero uno on the 'risks' to the US outlook (I usually hear oil, Europe, China, etc., in my line of work). According to the Center on Budget and Policy Priorities, the State budget gap is not expected to clear at least through 2013. From the CBPP report "States Continue to Feel Recession's Impact":Three years into states' most severe fiscal crisis since the Great Depression, their finances are showing the clearest signs of recovery to date. States in recent months have seen stronger-than-expected revenue growth.
This is encouraging news, but very large state fiscal problems remain. The recession brought about the largest collapse in state revenues on record, and states are just beginning to recover from that collapse. As of the first quarter of 2011, revenues remained roughly 9 percent below pre-recession levels.
Consequently, even though the revenue outlook is better than it was, states still are addressing very large budget shortfalls.
Better put: state revenues are rising more quickly than expected from a low base following the most precipitous drop 'on record'. Not feeling too confident here.
This has been my biggest economic concern, especially since the huge Republican electoral win (in a low turnout election) in 2010. The radical cuts put in place by the Republican governors and legislators in Ohio, Michigan, Pennsylvania, Indiana and Wisconsin will really slow down those states' economies. Those cuts don't kick in until after July in Ohio. I expect things to continue to slow down this fall. Hopefully I'm wrong, but some other people are saying the same thing as we see weak economic numbers right now.
Also from that post, this chart:
No one is saying eliminate all government spending as you would almost imply. Just simply live within your means. Your description of "radical" cuts is ignorant at best. If we all don't begin to live within our means (including government) at what point will it all catch up to the obvious bankruptcy of the US? Entitlement programs and reckless spending is where we are at now. A good swing the other direction and maybe we will come back to some sort of happy medium. Just look to Europe and places like Greece where the government controls everything and the population is made up of mindless drones. I for one want to live in a country where I have opportunity outside of serfdom to a bloated government.
ReplyDeleteI would classify these cuts as pretty drastic. Besides, part of the problem is that Republicans have shoved through tax cuts which create budget shortfalls. Starving government of funds isn't a brilliant strategy in my opinion. We could cut out a couple of wars and trim wasteful defense spending while getting rid of the stupid Bush tax cuts and we'd put a very sizable dent in the deficit. Combine that with single payer health care to rein in health care waste and tweaking social security, and we might be able to balance the budget without gutting basic science research and skimping on infrastructure investment.
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