Come Saturday Morning: ’90s and ’00s Tax Cuts Are Why State and National Budgets Are Messed Up
The URL for this Mary Williams Walsh article, “Panel to Scrutinize Causes Behind Weak State Budgets”, in the New York Times gives a big clue as to who will be blamed, yet again, for messing up the budgets of our states:
Yup, it’s those greedy workers again, wanting not to frickin’ starve in their old age!
Amazingly enough, Walsh fails to mention the role played by the massive tax cuts that the vast majority of states pushed through in the 1990s. It was known, as far back as 2002, that these tax cuts were going to cause major problems down the road — in fact, they already were causing major problems in 2002, with the first Bush Recession having kicked the air, and much of the revenue production, out of the economy:
States now face a gigantic revenue problem. Total state tax revenue in fiscal year 2002 was some $38 billion lower than it was in the previous year after adjusting for inflation. Some 45 states lost revenue. Official forecasts released to date suggest that state revenues at best will hold steady after adjusting for inflation in fiscal year 2003, meaning that none of that $38 billion is likely to be recouped this year. Indeed, the revenue hole could get even deeper.
These revenue problems are taking a substantial toll on the services provided by state governments. Many states, for instance, are reducing health insurance benefits or eligibility for low-income families, or are increasing the amount that poor families must pay to access health insurance. Many states are reducing eligibility for child-care subsidies for working families; many are raising tuition for students at public colleges and universities. And further such cuts are likely to occur as states exhaust their rainy day funds and other one-time mechanisms for shoring up budgets.
Personally, here’s what I find to be really sick about this: The guy who in Minnesota was one of the main drivers to slash state taxes was the guy who was running the Minnesota House in the late 1990s — Tim Pawlenty. He then ran for governor on a platform of eliminating the very deficit he’d worked to create, artfully dodging (with local media assistance) all blame on his way to the Governor’s Mansion. Now he wants to be president.
As with the states, so it is with the nation: The Bush tax cuts are the single biggest set of factors driving up the nation’s debt. Period. Even the multiple wars aren’t as big a drain. But of course you won’t see this mentioned much on the evening TV news — they’re too busy telling us we must give up our retirements so that rich people don’t have to pay taxes.
Keep your eyes on Illinois. Its legislature and governor moved to reverse course, stop the insanity, and raise taxes as a part of the plan to get out of the hole dug by all the tax cuts of the past twenty years. I say to keep an eye on Illinois because chances are good that our corporate tax-cut-loving national media will not, especially if the state does well as a result of stopping the tax-cut insanity.