U.S. Senator Barack Obama, the presumptive Democratic Party presidential nominee, and various Democrats in Congress are even talking about handing over more federal taxpayer dollars to state politicians as a means for stimulating the economy. That would be really funny except for the fact that these people seem serious.
A few points from a cover story titled “States pay price for binge in spending” in the August 1-3 USA Today are worth noting:
• “State and local government spending has been rising three times as fast as revenue amid warnings from governors that their finances are nearing crisis stage. As many Americans face stagnant wages, high gas prices and job uncertainty, new government figures show that state and local governments boosted spending 7.8% in the second quarter compared with 2007 while revenue rose 2.5%. Government is on a hiring binge, too, even as private-sector jobs disappear.”
• “State and local governments are on track to spend more than $2 trillion for the first time in 2008 — about 13% of the nation's gross domestic product. A key factor driving higher spending: new employees and higher compensation.”
• “Even California, despite years of budget woes, has continued to add employees. "It's the strangest thing. Government keeps hiring even when times are tough," says Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., a private business group.”
• “Chris Edwards, budget director of the libertarian Cato Institute, says elected officials don't manage money well. ‘Why can't government adjust a percentage or two here and there without having a crisis?’ he asks. ‘Businesses do it routinely.’”
Excellent point, Chris.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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