Making little effort to suppress his relish, New York Times reporter Michael Janofsky chronicles the anguished labors of the Republican-led states to balance their budgets (“State G.O.P Legislators Think the Unthinkable,” Feb. 14). The “unthinkable” mentioned in the headline isn’t of the Herman Kahn variety—the states aren’t really contemplating strategies for waging thermonuclear war. They’re contemplating something far more horrific (for them). Raising taxes. Janosfsky writes:
Lawmakers here [Utah] and elsewhere have reached a point where they say they can no longer cut their way out of crippling deficits that have put states in the worst financial shape since World War II. … And much of the talk around the states is coming from Republicans, for whom raising taxes is anathema to their political souls.
Though every state has cut spending since the bust, they still face a cumulative deficit of $70 billion, with Democratic-controlled California looking at $35 billion by itself. Tax increases seem “inevitable” in many states, Janofsky reports.
How did the states get into this fix? Janofsky alludes to federally mandated spending and to rapacious tax cutting by the states. But nowhere in his 1,200-word dispatch does Janofsky discuss the spending spree the states indulged in during the economic boom. According to a Cato Institute report—from May 1999, well before the crash—state revenues increased by almost twice the rate of inflation plus population growth between 1992 and 1998. “In an era of almost no inflation, state budgets grew by 4.5 percent in 1996, 5 percent in 1997, and nearly 6 percent in 1998,” write Dean Stansel and Stephen Moore. At the same time, the states began pocketing the $200 billion tobacco litigation windfall.
Rather than placing a cap on spending in the face of budgetary surpluses, the states acted as if they had won the lottery. They added new programs and expanded existing ones. They hired more employees. And then came the Judgment Day of the crash.
According to Heritage Foundation analyst Brian M. Riedl, as California reaped a 28 percent increase in revenues between 1998 and 2003, it also increased spending by 36 percent, thereby converting a $10 billion surplus into its current deficit. The California shortfall reflects not only the cost of existing programs but new ones, too, he writes. Riedl applauds Michigan, Wyoming, and Colorado for avoiding extravagant spending, which has made their deficits much more manageable. The states don’t have complete control over spending, Riedl acknowledges—the feds force them to split the cost of the pricey Medicaid entitlement. But he accuses the harder-put states of compounding their deficits by gold-plating Medicaid coverage with new benefits and extended eligibility.
In today’s Times, Stephen Kinzer applies similar fiscal myopia to the state cuts in arts funding (“Some States Propose End to Arts Spending“). Kinzer catalogs the cuts to art programs without mentioning the run-up in government arts spending during the boom. That the states might have to learn to live within their means—and, gasp! cut the arts—during a recession seems not to occur to the New York Times. Is the Times being spun, or is no spinning necessary?
In yesterday’s Washington Post, Rene Sanchez drops 1,475 detailed words (“Orange Feels Pain of Calif.’s Budget Pinch“) on the California complications (library cuts, police-staffing cuts, senior-centers cuts, transportation cuts, health-care cuts, education cuts, prison and jail cuts), but assigns only 200 or so to the idea the state’s problems might be of its own making. Like his Times colleagues, Sanchez seems to accept as a matter of faith that tax increases are the only way out of the state deficits.But give him credit for quoting sources who say the $35 billion deficit—the number cited by Gov. Gray Davis—might really be $29 billion, and for noting the resiliency of the California economy that may rebound and moot the deficit apocalypse.
Conservatives blame the dastardly liberal press for the, uh, deficiencies of such stories. Me? I blame 1) a lazy press corps, which loves to write its stories straight out of the mouths of official sources, and 2) cheapskate publishers who could hire number crunchers to inspect the state budgets and assess the fiscal damage directly but won’t.