Lovely:
Having already stripped the nation of a source of economic growth, the budget crises in California and in almost every other state are now beginning to drag down the national economy, prolonging the weak, jobless recovery, the latest budget numbers show.Over the past two years, the states have gradually cut between $20 billion and $40 billion --no one knows exactly how much--from their spending. Billions more in cutbacks are coming in the fiscal year that started July 1. In California alone, a tentative budget deal will presumably require the state to rid itself of at least $8 billion in current spending, with the cuts likely to fall most heavily on education and aid to the poor.
Of course, the idea that the cuts would most affect education and the poor is no shock: one of the major things that state governments do is education, along with maintaining roads and funding social programs. Hence, any cut in a state budget is almost certainly going to affect education and social programs.
And, as has oft been said, the lesson here is not to start spending like crazy during boom times, as they never last:
The states experienced a similar deficit problem in the early 1990's, during the last recession-and-recovery period, but the amounts involved were much less and the impact on the economy almost nil. This time, total spending by the states, which nearly doubled over the decade to more than $1.1 trillion a year, has slowed to a growth rate of barely 1 percent annually from an average of nearly 7 percent in the 1990's.The slowing has been in response to a sharp drop in state tax revenue, which rose precipitously in the booming late 1990's, in part as a result of the stock market bubble and the capital gains taxes collected on market profits. As tax revenue rose, spending by the states also increased. So did each state's rainy day reserves, even though many states cut taxes during the good years.
Source: Red Ink in States Beginning to Hurt Economic Recovery
Posted by Steven at July 28, 2024 07:16 AM | TrackBackUh, where's your evidence that we "spend like crazy" during the good times? I know this is an old saw for conservatives, but it would be really nice to have some evidence for your assertion, instead of just throwing it out there as fact... It's a lazy way to demagogue.
Posted by: John at July 28, 2024 08:41 AMWell, at 7am in the morning I tend not to do much research on state budget data :)
And, you will note that NYT story (that bastion of conservative old saws) also notes that spending increased during that period.
Seriously, while "spending like crazy" is a bit of overstatement, it is the case (and not one that is widely disputed) that the states did over-spend during the boom as if it wasn't going to end.
Posted by: Steven at July 28, 2024 08:55 AMSorry 'bout that. :) From Kevin (CalPundit) there's pretty good evidence that 1) We were coming out of record low spending 2) We are in the middle of states spending 3) Prop 13 forced CA to rely more heavily on income vs. property taxes - unlike almost every other state. While I certainly agree that all governments are inefficient, I see the problem as one of reliance on cyclical sources, rather than just "spending like crazy". Also, I note that anytime there's a surplus, the republicans give it away, rather than saving it for a rainy day... I'm no fan of Davis, but I do think that it's hardly his fault. We do, after all, have a legislature which is supposed to actually be responsible for the spending...
Posted by: John at July 28, 2024 10:01 AMI would agree that tax cuts are part of the issue in terms of the reactions to budget surpluses during the boom times (and I am talking more broadly here than just CA).
I would also concur, at least in part, about Prop 13. Unlike many consrvatives, I don't think that Prop 13 was a good idea, and has had a number of perverse, and unintended, consequences to the property tax system in CA.
And, for what it's worth, I am for the tax increased being proposed in Alabama.
Still, I would argue that, on balance, it is fair statement to make that, in general, states behaved like the mid-to-late 90's boom was never going to end. Of course, that isn't unusual behavior for governments...
Posted by: Steven at July 28, 2024 10:05 AMJohn asked:
"Uh, where's your evidence that we "spend like crazy" during the good times?"
" California is probably in the poorest fiscal shape of any state. The current budget gap is estimated to be $35 billion. The budget gap was caused by a remarkable run-up in state spending in the late 1990s. Indeed, spending doubled between FY1994 and FY2001 from $39 billion to $78 billion. State spending jumped 15 percent in FY2000 and then another 17 percent in FY2001."
http://www.cato.org/dailys/02-11-03-2.html
That is officially spending like crazy.
Paul
And a note John: Fact check everything Kevin says before you repeat it. It will keep you from embarrassing yourself.
Posted by: Paul at July 28, 2024 01:03 PMAlso, I note that anytime there's a surplus, the republicans give it away
You are correct. When government has taken away more money than it can spend from the taxpayers causing a surplus, we republicans choose to return it to the taxpayers rather than "spend it like crazy" like the democrats do.
For that I am quite proud.
I find it quite interesting that while Davis is spending California into oblivion you somehow manage to blame Republicans.
That says far more about your arguments than I ever could.
Paul
Well, I guess I should consider myself spanked, but I still don't see the issue with the data I quoted. If, as stated, that California was pulling itself out from record low spending, then the increases would be reasonable. Correct? Regardless of whether you believe we should have stayed in the "record low spending" or not, the rationale I gave is consistent with the spending increases. So at issue isn't whether we increased our budget by X percent over X period. It's whether or not this was an acceptable number. In Paul's view, the answer is obviously no - the number should likely be zero in his mind.
As to republicans and my blaming of them, the idea that money you get in as a surplus is "robbing" the people... Well, that's why people save for a rainy day, isn't it? You say we should give it away in the good times, but in the bad times, you say we should just keep tightening our belt. Maybe if we saved surpluses in the good times we wouldn't be nearly as bad off in the bad times. And while I don't blame the deficit on the republicans, I do blame not having any savings account what so ever on their religious insistence that we can't save it and have to give it away.
Posted by: John at July 28, 2024 11:33 PM