The Stimulus Lesson for Soon-to-Be Cash-Strapped States

“Frankly,” said New York Gov. David Paterson to a joint session of the state’s Assembly and Senate in Albany, “we are running out of money.”

According to Bloomberg, the state of New York is staring down the barrel of a $3.2 billion budget deficit this year, and will be making a $2 billion down payment on next year’s projected deficit of $6.8 billion. By 2012, when the font of federal money from President Barack Obama’s so-called “stimulus” package runs dry, the budget gap will explode to $14.8 billion.

Gee whiz, if only somebody saw this coming.

In late May, embattled South Carolina Governor [and avid hiker] Mark Sanford filed suit against South Carolina Attorney Gen. Henry McMaster due to actions taken by state lawmakers which would have required him to accept federal stimulus funds. As a result of that suit, as well as his request sent to the White House–and subsequently denied–that the funds be accepted on grounds that they be used not for the expansion of entitlement programs but rather to pay down state debt, Sanford took a great deal of flak politically from those who felt that the Palmetto State’s burgeoning unemployment rate and struggling schools would be benefited by money from the federal pocket, but he remained steadfast in his refusal, maintaining that accepting the stimulus funds would commit the state into funding unsustainable entitlement programs itself after the federal money ran out.

Accepting the money, Sanford stated in the court documents, “would further burden South Carolina’s economy and substantially increase the state’s debt in the future and therefore is contrary to the welfare of the people of South Carolina.”

And he was right. Look at New York. By accepting federal stimulus funds, New York has been handcuffed into continuing programs that the state simply cannot afford. Sure, the money was there when American taxpayers were reluctantly footing the bill thanks to the American Recovery and Reinvestment Act, but when it runs out — well, you’ve got 2012 and a $14 billion budget deficit.

There is no such thing as “no strings attached” when it comes to dealing with the federal government. New York and other states saw the stimulus cash as a way to extend some social programs and establish new ones, but they did so without consideration as to where the money would come from in order to sustain those programs. And now, as Paterson says that “there are better ways to generate revenue without dismantling vital services in the area of education and health care” while simultaneously recommending cutting education spending by $480 million and Medicare spending by $287 million, reality should be setting in for New Yorkers from Long Island to Lake George: say hello to an increased tax burden.

But that’s the wrong answer. Raising taxes will not bring in more revenue. We’re seeing that in New York City already, where there has been a mass exodus of those who make the most and pay the most in taxes. Raising taxes will only increase the burden on New York families, and decrease tax revenue in the long run.

Such are the effects of expanded government. Though derided as a dim bulb by so many on the left, Mark Sanford saw it coming. Why didn’t David Paterson?

Scratch that.

Such are the effects of expanded government. Though derided as a dim bulb by so many on the left, Mark Sanford saw it coming. Why didn’t David Paterson have that same understanding of the downhill consequences of getting into bed with Washington, D.C.?

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Comments

  1. Rix says:

    > Why didn't David Paterson have that same understanding of the
    > downhill consequences of getting into bed with Washington, D.C.?

    Here's an answer you won't like: because he is arrogant, stupid, and serves as yet another affirmation for my racist views. The only reason the guy is where he is, rather than being a P.C. figurehead magnet for NYC voters, is because his superior got caught banging a nice looking whore (note to Gov. Sanford: next time, pick a better looking one).

  2. Gail B says:

    My retired civil engineer friend from high school says, "YEP!"

    P.S. My RCEFFHS knows money…and when it's wasted.

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