The new Obama Presidential administration would like to allocate $825,000,000,000.00 to help rescue the United States economy. On the receiving end are new government spending programs and tax cuts. In addition, Obama will put his new Secretary of the Treasury to work examining the list of banks requesting bailout funds and decide who will get a handout as a continuation of TARP (the Troubled Asset Relief Program) initiated by Bush.
Before the government attempts to bail anyone else out or hand out tax cuts, it should take care of its own needs, first, by making up deficits in state budgets and investing in state-sponsored government projects.
Remember the wise words of the airline attendant: “Be sure to put on your own oxygen mask first before assisting others.” Otherwise, you might suffocate while attempting to tighten the yellow rubber strap on your squirming child’s mask and then you’ll both die.
Dozens of states have already stripped their budgets to the bare bones. Despite valiant efforts, states need money NOW to continue operation of schools, law enforcement, road maintenance, pensions, and countless important and essential programs. If our local governments cannot afford to operate, they are in danger of collapse. If this happens, we are all done for.
Fortunately, the Obama administration does intend to spend some money helping to bail out state governments. According to a January 25, 2009 article in the The Christian Science Monitor, roughly $241 billion of Obama’s stimulus package will be allocated to states to help them rescue their budgets by funding $87 billion in Medicaid programs, $120 billion in education, $4 billion in law enforcement, and $30 billion in roads and infrastructure.
However, state budget deficits are predicted to total at least $350 billion over the course of 2009 to 2011, according to the Center on Budget and Policy Priorities (CBPP). And that’s with all the cuts to “non-essential” services.
Why are state governments in trouble? They haven’t been able to collect as much revenue as expected, either from taxes, sales of lottery tickets, fees, other sources big and small and, SURPRISE!... low to zero dividends on investments. Yes, even local governments invest in the risky stock market.
Whenever a local government faces a deficit, we all hear about the cuts in education. “No instruments for the band,” or “We’ll have to cut the wrestling team.” Such dire predictions always garner sympathy at election time so that governments can get their local tax levies passed.
However, there is much more at stake this time than just new uniforms for the football team. A lot of private companies depend on the guarantee of local government spending for their own survival when times are lean.
For instance, when a state must cut a building program, someone on the other end is suffering. There’s the engineering firm in Texas and the architecture firm in New York who was counting on the job and now must lay off their own workers. There’s the local contractor who must tell their masons that they’re sorry, the job was cancelled, but, “You won’t get unemployment because you weren’t an employee.” There’s the supplier who already put in the order for steel I-beams from Pittsburg and limestone from Idaho. Cancelled. Then, there’s the manufacturer who won’t be moving to your state after all. “We’ll just keep outsourcing to China where the government has built all the necessary buildings, roads and docks we need, not to mention the cheap labor.”
When a state must cut funds to museums and parks, they are in danger of falling into disrepair, or worse, closing down completely. The seasonal employee who counted on the summer job cleaning cabins might not be able to afford tuition at Ohio University next year. The hotels and restaurants who depend on tourism to Yosemite will lose customers. The gift shops at Cape Hatteras will lose sales and stop ordering cutesy molded light houses from the artist who makes them in Seattle.
When a state must cut funds, the effects are far reaching. Jobs are lost far and wide across the nation. You may not care that Montana needs new rest areas built on I-90 because you never plan to go there. However, perhaps the door manufacturer in your local state of Utah was counting on getting the supply contract.
Other countries invest in their citizens in infrastructure and free education. Other countries now have the jobs which used to belong to our own citizens.
It’s time we invested at home. Let’s heal ourselves first before trying to heal anyone else.
Monday, January 26, 2009
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