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James Surowiecki notes that while the feds can stimulate, most states are legally bound to feed...

Jul. 20, 2009 6:17 PM ETBy: Jason Aycock, SA News Editor4 Comments
James Surowiecki notes that while the feds can stimulate, most states are legally bound to feed a downturn by balancing budgets: There must be 50 ways to kill recovery. Gotta hike tax, Jack; just write an IOU, Stu.

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Comments (4)

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The other way of looking at this is that during downturns the share of GDP consumed by the federal government can increase without bound, while that consumed by the states remains relatively unchanged. When recovery begins, all those people employed by the federal government as part of its "stimulus" stay there, limiting growth and draining away productivity forever. Not to mention the cost of servicing the trillions in extra debt.

The states have it right.
Poor Texan profile picture
"Money for the states translates directly into jobs not lost and services not cut"

Of course, you cannot lay off government employees or ask them to take a pay cut or give up a portion of their fringe benefits as employers in the private sector do. The only solution is to cut services. And then the "people" suffer so you just can't do that. So our budget woes continue. We'll just increase taxes and watch more private sector jobs lost but our government is there to serve them.
Dialectical Materialist profile picture
Roll up your sleeves, Steve
Make a new plan, Stan
Eliminate some jobs, Bob
Make some new fees, Lee

Wield the budget axe, Zack
Seek some more aid, Wade
Float some new debt, Brett
Find a revenue stream, Wahim

and on and on it goes....

doubleguns profile picture
Just sell a few bonds, Bond.
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