State budgets across the country will stay in crisis without major structural reforms, according to a new report from the State Budget Crisis Task Force. In a study of six major states—California, Illinois, New Jersey, New York, Texas, and Virginia—the economic study group identified what they called "six major fiscal threats," including "eroding tax bases," rising Medicaid costs, and decreased federal spending levels.
Despite this, various states have rejected or are considering rejecting funds from the federal government to expand their Medicaid programs. Norm Ornstein of the American Enterprise Institute has said that rejecting the expansion program will not help reign in Medicaid costs; in fact, he says, "It's going to cost the state money."
The consequences have already been severe. As Lean Forward has reported in the past, cash-strapped states and cities have been reducing their debt burdens through a wave of privatization and devastating cuts: Scranton, PA's mayor has slashed public employees' salaries to minimum wage, various cities are selling ad space on public goods to corporations, and some cities are even saddling the perpetrators of minor misdemeanors with crushing debt, then outsourcing the debt collection to private companies.
The full Task Force report can be read here. The New York Times also has a longer article on the study.
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In other words, for states, politics trumps managemnt, every time.
Can't the states that are in fiscal trouble just do what they've always done when confronted with reality? Just raise taxes and increase spending. What's so hard to understand about that?
Who said it was hard? More its because these states are run by folks so smart they don't mind cutting off their foot to spite their body.
Who said it was hard? More its because these states are run by folks so smart they don't mind cutting off their foot to spite their body.
In 2010 the Republicans blocked every bill and effort by the President and the Democratic legislators to increase aid to the States. The Republicans openly discussed the need for states to go bankrupt so that it will be more lucrative for privatize government programs and services. The Republicans push for privatizing Social Security, Medicare, the prison system and public schools as well as all public utilities. The Republican push for small government i.e. corporate run government! Limit all campaign financing for every elected office in government to public financing and we will return to a government of the people, by the people and for the people. This year we face the real threat of permanently becoming the government of the corporation for the corporation by the corporation.