We couldn’t possibly do without!

The predicament of states like New York and California reminds me of a couple who came to see me about their problems. They had been bankrupt twice. They asked me how they could avoid going under a third time.

They owned four vehicles. How about they sell one or two? “Oh, we couldn’t possibly do that. We need the pickup for ...”

How about you cancel your big vacation? “Oh, we need that break to relieve the stress.”

They defended every bit of their spending.

New York and California’s budgets are jokes. They are projecting massive deficits, multi-billions of dollars in the red. Many other states are in the same leaky boat.

And so what do these states do about spending? They increase it. Yes, they spend more.

“Oh, we couldn’t possibly do without ...”

New Yorkers are already the most taxed people in the country. Governor Paterson wants to increase 88 more taxes.  Does he want to cut the state’s spending?  Nah.  He wants to increase it $1.3 billion.



Now think about this.  The country is plunging into recession. New York gets huge revenues from Wall Street and Wall Street is sick. Upstate business and communities have been stagnant for years.  Does this sound like a good time to increase 88 taxes?

Think further.  The state spends billions on gasoline for its fleet of vehicles. Gas prices have plummeted. It spends billions on heating oil. Heating oil prices have plummeted.

The state borrows money. The cost of borrowing has fallen dramatically. The state buys many millions of dollars of food. Food prices have fallen. The state buys thousands of cars and trucks. Car and truck prices have fallen.

With all these prices falling, don’t you think the state might have found ways to cut its budget? After all, it is saving probably billions by way of these lower prices. If the state is not able to cut its budget after all these savings, it must be ratcheting up true spending by a lot more than $1.3 billion.

When your income suffers, you cut back. If you are smarter than that couple, you do. You don’t take the vacation. You turn down the thermostats. You spend less in various ways.

When a company’s income droops it cuts back. It reduces travel for employees, cuts out a few conferences. It trims ad budgets. It lets some folks go. 

Why is it that a state cannot do the same thing?

States will argue that they have to boost spending in bad times to try to counter the bad times. Is that right? Then why do they boost spending in good times too?  Hey, the tax money is rolling in. Let’s increase our spending. Hey, the tax money is not rolling in. Let’s increase our spending. We could make this our state motto.  Who knows the Latin for Let Us Boost Our Spending?

Have you ever known your state to close any buildings? To reduce its fleet of vehicles?  To re-organize departments and cut the number of workers?

California cannot even find the backbone to cut things like embryonic research and global warming studies. Whilst going bankrupt. Whilst begging Washington for a $7 billion bailout to pay state workers. Whilst increasing its spending yet again.

Across the country, states have increased spending an average of 6 percent. That is 6 percent per year. That is 6 percent per year for 30 years. And so states across the country will run up $200 billion in red ink over the next two years.

Taxpayers will never get it. But they deserve better government than this.

By the way, that couple went bankrupt a third time. Maybe they should look for jobs in the state government.

From Tom ... as in Morgan.                  

For more columns and for Tom’s radio shows (and to write to Tom): tomasinmorgan.com.

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