Monday, July 13, 2009

Stimulus Helps States Avoid the Tough Choices

At least that's how I see it. Liberal blogger Matthew Yglesias had a somewhat different take when he noted recently that, "that stimulus funds are sharply reducing states’ needs for tax hikes or budget cuts."

He goes on to say that since conservatives argue against raising taxes during a downturn, they shouldn't argue for budget cuts either since, in his words, budget cuts:
[H]ave the same pro-cyclical impact. I’ve heard people say that the problem with stimulus is that it ignores the need for the economy to make structural adjustments. But huge state budget cuts don’t make structural adjustments easier, they simply increase the quantity of structural adjustments that are needed.
Doesn't increasing the quantity of structural adjustments make these adjustments tougher in the future?

Federal stimulus money allowed states to continue spending beyond their means and left all of the tough choices for the future, like a time capsule filled with nothing but trips to the dentist you put off and all the vegetables you refused to eat as a child. Even here in Wisconsin, the budget in no way prepared us to face an uncertain economic future.

When it comes to state budgets, why should we put off structural adjustments? If the new equilibrium is simply less arts education in our public schools because property tax revenues have fallen sharply and are not likely to rebound any time soon, aren't we better off getting the art teachers out of the classroom now? They could start training for all of those healthcare IT jobs that are always being touted as sources of future employment and (!) ways to reduce healthcare costs. Maybe we could even pay for the training with that soda pop tax Yglesias is always pushing.


Dad29 said...

The thing to do is gradually phase out State and Federal programs which are ineffective (or un-Constitutional--like the Dept of Education.)

IOW, deflate Gummints and their costs, which will at least get us closer to balanced budgets and maybe even national-debt reduction, not to mention State-debt reduction.

It would NOT be a good policy idea to close out programs in one fell swoop, so to some extent Yglesias is correct.

Jeremy R. Shown said...


OK, we need to unwind. But when? We didn't do it when times were good and we are not doing it now.