Morning Bell: Stop Digging
Posted October 30th, 2008 at 9.04am in Enterprise and Free Markets.
Since it appears more and more likely that Congress will approve another economic stimulus package within the next couple of months, every special-interest group under the sun is swarming Capitol Hill for handouts. Yesterday it was the nation’s governors turn as Govs. David Patterson (D-NY) and Jon Corzine (D-NJ) came to the House Ways and Means Committee on their knees begging for cash. Patterson compared the current financial crisis to 9/11 and asked Congress for “a direct injection of federal aid to state budgets.” Corzine implored, “The federal government ignores state and local governments at serious peril.”
If only that was the case. As the lone dissenter on the panel, Gov. Mark Sanford (R-SC), pointed out the federal government has been doing anything but ignoring states. Federally imposed unfunded mandates — including No Child Left Behind, prescription drug regulations and raising the minimum wage — have cost states $131 billion over the last four years. Instead of more federal money and control, Sanford said: “In short, I’d ask members of the committee to simply give the states more freedom. Give us more flexibility. Give us more in the way of control over the dollars we already have and less in the way of costs. Give us more options, not more money with federal strings attached.”
Sanford’s principled refusal of a federal bailout for his state did not end there. His entire testimony is worth a read, but here are some highlights:
The situation we’re now in did not develop overnight, and in the same way it won’t be cured by morning. As the old saying goes, the first step to getting out of a hole is to quit digging. … Our national debt is now over $10 trillion — more than $4 trillion higher than when I left Congress at the end of 2000. … In fact, if this $150 billion stimulus package is passed, this year’s budget deficit could top $1 trillion — adding to the over $10 trillion national debt and making it 70% of a roughly $14 trillion economy. …
Simply throwing money into the marketplace in the hope that something positive will happen ignores the fact that the government has already put over $2 trillion into the system this year using various bailouts and stimulus packages: including $168 million in direct taxpayer rebates this past spring; an $850 billion bailout last month that cost more than we spend on defense or Social Security or Medicaid and Medicare annually; and myriad loans and partial nationalizations of institutions like Freddie Mac and Fannie Mae, JPMorgan Chase, Bear Sterns and AIG. … This year’s $2 trillion plus in bailouts and handouts seems that much more momentous when you consider that federal tax revenues last year were only $2.57 trillion. Simple math demands we ask ourselves if $2 trillion did not ward off the crisis in confidence we’re currently experiencing, then how much can $150 billion more help? …
Essentially, you’d be transferring taxpayer dollars out of the frying pan — the federal government — and into the fire — the states themselves. I think this stimulus would exacerbate the clearly unsustainable spending trends of states, which has gone up 124% over the past 10 years vs. federal government spending growth of 83%. … There seems to be no consequence, and indeed a reward, for unsustainable spending growth by states. In effect, sending $150 billion more to states would produce another layer of moral hazard — already laid bare at the corporate, individual and federal levels in recent years.
We couldn’t have said it better ourselves.
Quick Hits:
- In another “significant departure” from the original plan the American people were sold, the Wall Street rescue plan could now be used to buy billions of dollars in bad mortgage loans.
- Russia’s state development bank approved $10 billion in refinancing for the country’s cash-strapped oligarchs.
- Yesterday, a former employee of ACORN testified in a Pennsylvania state court that the group’s quality-control efforts were “minimal or nonexistent” and largely window dressing.
- Rep. John Hall (D-NY) was forced to fire an aide who both voted in New York’s Democrat primary and registered and asked for an absentee ballot in Ohio.
- According to the Associated Press, “Barack Obama was less than upfront in his half-hour commercial Wednesday night about the costs of his programs and the crushing budget pressures he would face in office.”
- Author: Conn Carroll
- Interact: Sphere
- Share This
October 30, 2008 Ken, Venice, Florida writes:
It used to be the case that since states couldn’t print money, they pretty much had to pay their own bills with bond issues or taxes or fees.
But now it seems they’ve hopped onto the running board of the Federal money truck and expect dollars to be printed for them too.
It’s all going to mean a bigger drop in the value of a dollar.
Remember when a hot dog at the show cost .25? Now it’s $4.00.
At that rate in another 40 years it will be $64.00.
We have to get Ron Paul’s financial philosophy into play, or there won’t be anything left for our children from our savings but a college loan to pay off for themselves.
It’s really time now to ditch the Fed, enact the gold standard, withdraw from all the trade organizations, U.N., NATO, discontinue foreign aid and foreign adventurism, and settle down and attend to our own knitting. The Fair Tax would be a great start toward making things right. But no..we reject Paul in the primaries, Bob Barr in the election, and elect one of two candidates who want to continue to feed the inflationary monster with money out of thin air.
Is there no sanity anywhere among the “elite” people in power? Is Greenspan really confused about what caused this mess, as he said?
Beam me up, Scotty!