Friday, November 18, 2005


"Worst economy since the Great Depression" trickles down

USA Today is reporting on the effect, at the state level, of the Bush economy:

New Hampshire's Legislature is famous for its frugality, a habit that lets the state operate without a sales or income tax. But this week, the Republican-controlled Legislature met in special session to spend a little money: $10 million to help poor people pay heating bills and $3.5 million for electric bills. That's what an $82 million surplus lets legislators do.

"Our revenues are far enough ahead of projections that we don't have to cut anything and can spend a little when emergencies come up — like high heating oil prices," says Republican state Rep. Norman Major, who heads the Ways and Means Committee.

State and local governments are enjoying their strongest revenue growth in 15 years, giving legislatures the power to spend billions without raising tax rates.

This, of course, is the “worst economy since the depression” that the left keeps harping on. Let’s see, where is all this additional revenue coming from? Why, from the same place as the increase in federal revenues that has cut almost 23% from the federal deficit from 2004 to 2005…the economic expansion that has resulted from the Bush tax cuts.

Everybody since Julius Caesar, at least, everybody who is smarter than my toaster, has understood that cutting taxes results in economic expansion which results in increased tax revenues from lower tax rates. Don’t expect to hear any of this on your tv newscast though, because it certainly doesn’t mesh very well with the left’s “terrible horrible no good economy” blather, or the “tax cuts for the rich” mantra.

Want to see a liberal’s head explode? Ask him/her/it if tax cuts are evil, why did John Kennedy advocate cutting taxes? Ask them if they can tell you how many million lower income working folks have been removed from the tax rolls completely by the Bush tax cut structure. Ask them if they’re aware of the fact that the wealthy pay a higher percentage of the total taxes paid now than they did before the tax cuts. On second thought, don’t bother. Their heads may spin around or explode, which is fun to see, but you won’t change any minds. They already know what they think, and there is no point in confusing them with actual facts and figures.

So where is this money going to go?

Arkansas Gov. Mike Huckabee, chairman of the National Governors Association, says that replenishing rainy-day funds that states tapped heavily during an economic downturn in 2001 and 2002 will be a priority. "A lot of governors are nervous, even with the surpluses, because nobody wants to go back and make big cuts in education and Medicaid that we saw during tough times," he says.

Some early spending plans:

Education. New Mexico will give teachers 6% pay hikes. Alaska Gov. Frank Murkowski, a Republican, wants to increase spending per pupil 8.7% to $5,347. California may be required to spend billions more on schools and after-school programs voters approved.

Medicaid. States have started again to expand eligibility in health care programs for the poor. Illinois will offer subsidized health coverage to all 243,000 uninsured children in the state, regardless of family income.

Pension plans. Arkansas, Montana, West Virginia and Tennessee will consider putting part of their surpluses into pensions for civil servants. Many states have underfunded pension plans that, if not fixed, will cost taxpayers large amounts in 20 years.

But remember, 2006 is an election year. So watch and see which state legislatures maintain a rational approach, and which engage in an orgy of vote-buying spending projects and pork-barrel boondoggles.

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