Notes on the Atrocities Like a 100-watt radio station, broadcasting to the dozens...
Tuesday, January 14, 2003
Tax Cuts and the Economy
The Bush administration has adopted a two-prong approach when the question of the states’ budgetary woes arises: 1) the new tax cut will actually benefit the states (if not immediately, then at least in the long run) and 2) the states are to blame for their own mismanagement. These are, as usual, as inaccurate as they are misleading.
(The benefit would only occur in the event that the economy recovers. The figures the President uses are, like the figures he’s been using since he was a candidate, overly optimistic. And blaming the states is a little hard when they used those same, overly optimistic figures given to them by the administration when they crafted their budgets.)
But even following the Administration down those rabbit holes is to miss the bigger picture: with the states in such crisis, the economy itself is dangerously jeopardized. According to the National Governors Association, 41 states collected less revenue last year than expected; of these, 16 actually experienced negative growth. An article in today’s NY Times reports that this year shortfalls are “estimated at $45 billion and a projected gap next year of $60 billion to $85 billion — deficits of 5, 12, even 20 percent of the budget or more in some states.”
I’ve spent some time this morning trying to track down the statistic (failing, obviously, or I’d just quote it) of the percentage of the economy that depends on the states. It’s large. It’s exactly the reason the US bailed out South Korea and Mexico. And yet, to address this potential disaster, the President offers almost no aid to the states and instead proffers a tax cut for the wealthy that will actually cost the states money.
The administration’s only response? Ridicule. Now that’s leadership.