Tuesday, August 03, 2010

Senate – Reid Fails to Move State Aid Bill – Fed Budget Bust As States Must Be Prepared to Rein In Spending – Analysis

Beleaguered Harry Reid Falls Short on Federal Aid to States

The long and the short of it – the federal government’s deficit, without the tax base to sustain the status quo, let alone increases in spending (unemployment equals loss of income for the federal government), combined with the end of the “Stimulus”, will leave states relying on federal funds with no choice but to cut budgets and services.

Politico reported yesterday that Democrats in the Senate now understand that current spending levels are unsustainable and will make cuts from the President’s budget for 2011 after “summer recess” The title of the Politico article says it all “Budget Woes Snare State Aid”. States such as Pennsylvania were waiting to hear when the federal aid would arrive, as they cannot balance their budgets without help from the federal government.
Massachusetts has cut a “third of their local aid”, according to South Coast Today. First on the chopping block, higher education, with more cuts to follow:

“Looking ahead, experts warn of more painful cuts next year as one-time federal stimulus money disappears and the state grapples with a $2 billion shortfall.”

Those taxpayers left standing can anticipate hefty increases come next year, as Congress is prepared to implement a round of tax increases during a “Lame Duck Session”. Depending upon which news source one is reading on this subject, either the Lame Duck Session and impending tax increases are nothing more than a tool of the Republican’s attempting to keep the Democrats from “allegedly” spending the U.S. into bankruptcy (”The Lame Duck Looms”), or the more assertive Human Events article Tax Hike Planned for Lame Duck Session”, which outlines the “plan” by Democrats to fund the Presidents massive entitlement programs. Both articles are suggested reading. This due to the simple fact that it appears ideology trumps sanity with the 111th Congress. The backlash over public debt and spending which Democrats are admitting will cost them power in 2010, are the same Democrats prepared to sink 2012 in order to further progressive interests.

If, while waiting for new Congressional members to take their seats, outgoing members push through tax hikes, only one Political Party will take the blame – and this sets the stage for yet another backlash of the American public who is demanding the Government back off their paychecks, and find a way to increase private sector jobs, be it through tax cuts, or tax cuts.

Either way, both the States and Federal Government must realize that the nation can no longer sustain the unprecedented levels of spending. As U.S. taxpayers go further into debt, increases in local taxes (example: water bills raise for home owners, to fund sewer projects – which is a tax, either way one slices it). Inflation is reported to have stayed the same for food, however, in reporting the overall rate of inflation, the Department of Labor leaves food and fuel out of the equation – due to the volatile nature (i.e. ability to increase at a much higher rate). One thing is certain, the paycheck has remained the same, yet there is less “discretionary income".

It is estimated that only 50% of U.S. citizens actually pay taxes, and as employment opportunities remain the same (unemployment), or decrease, those left paying taxes (or currently paying taxes) are not large enough in scope and or income to sustain either state or federal current spending levels. Something has to give. The road back to prosperity is never an easy one – during the years immediately preceding the Carter administration, Ronald Reagan had to get a house in order, make painful cuts, and raise taxes for a short period, in order to bring the house in order enough to cut taxes across the board and get the nation moving forward.

Somehow, we survived and prospered, and yet, a mere thirty years later, a new administration has done nothing but mirror the Progressive Carter administration, and even ramped it up a notch, in order to push the nation, once again to the brink – the culprit – spending until there is a fiscal crisis at which point, one has to tax, everyone.

Unfortunately, the message got through to the Democrats in the Senate at the 11th hour (the majority Party always controls the purse strings, so any additional spending bills passed or not passed by the House or the Senate or the House are owned by the Democrats at this point. ) As not one of them, from the President to the most junior congressional representative can take personal responsibility (It is George Bush’s fault), for any of this mess, the nation is reacting now in kind.

In order to alleviate a lot of heartache, it would be suggested that governors look to some true inspiration, regardless of political leaning, in order to save their states, and ask New Jersey’s, Chris Christie, for help in the way of lessons on how to deal with out of control labor groups, (see Teachers Union), and get more power into the hands of individual cities and towns.

It is simple, as services and cuts are made, there are going to have to be some extremely painful choices, for example, Harry Reid’s plans for a monorail, and millions spent on stimulus signs (signs announcing the stimulus is about to work), would have been better placed in courses for lawmakers from the Federal, State and Local levels on fiscal responsibility.

It is time to take the needs of the people to heart, the taxpayer and the non taxpayer in total – Stimulus under Franklin D. Roosevelt involved an entitlement program that put the unemployed to work for the government – it did not in any way shape or form, include welfare – rather workfare – it’s a concept whose time has come again. In concert, taxes must be cut to stimulate corporate spending (on jobs and research) as well as individual spending on all levels (to pay for the salaries of those on workfare). Additionally, the offices and positions created by every single bill passed by this Congress and President have added to the government work force, and those salaries must be paid by the taxpayer – why not outsource and take the burden off the taxpayer, give the jobs to American companies, and let the private sector handle every aspect of the Federal budget. (With the exception of the military, this is one area that is the Federal Governments responsibility.)

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