No More Bailouts: It’s Time Spendthrift States Deal With Their OWN Problems
I’m taking some poetic license with the popular Dire Straights 80s song, updating it for 2020 and beyond. Because, in the current environment, “Money For Nothing” might as well become the inaugural theme song for our country’s politicians.
The ideology of free money, free STUFF, is spreading like, dare I say, an out-of-control virus. Because of the coronavirus crisis, politicians now have cover to argue everyone is entitled to free, free, free, and free! From multi-billion dollar bailouts for the airlines, to $300-600 dollar checks for the unemployed, Uncle Sam is apparently willing, ready and able to shell out the big bucks for his very large family. But, can he? Should he?
According to both sides of the aisle in Washington, absolutely! Indeed, both parties are using COVID as the reason to keep writing checks.
A Covid Economic Reality Check
So, let me offer a reality check. All COVID really did from an economic management perspective is expose the massive fiscal and financial holes that States through misguided leadership at home and in Washington had already dug. Too much money was being spent and wasted. Year after year, administration after administration, decade after decade, too many long-term commitments were overpromised and underfunded. These problems were all so B.C. Before Covid.
Unfortunately, little was done to address this growing problem in the “B.C.” era. Hey, why clean up after yourself when it is easier to leave your mess for another generation or another politician? It’s better to promise yourself comfort and ease and charge the indeterminate future. And let’s be honest, the only real metric used by almost every politician is whether or not they “win” an election.
As such, spending becomes the sweet nothing they whisper in their constituents’ ears. Prudence and responsibility are worth nothing in an election. Instead, fiscal responsibility becomes the sweet sorrows that COST politicians’ votes and elections.
And politicians learn fast.
Covid-19 Exposed the States for The Economic Disasters They Really Are
COVID exacerbated the fiscal problems so many states face, however, let’s be clear, many (aside from low tax states like Texas, New Hampshire, and Florida) were ALREADY fiscal disasters. COVID highlighted how poor fiscal management can handicap
government’s ability to respond to crisis. Had our elected officials acted responsibly and done what they should have long ago, the national discussion would be very different.
Many of the “old-line” states, unwilling to impose cuts on unaffordable services and pensions, have struggled to manage the impact of rising debt loads on their ability to meet basic needs. Fiscal mismanagement was viewed as something like the plague. Aside from the brief popularity of the Tea Party, there has never been ANY concept of how to develop an anti-deficit “vaccine” at the state and local level. There is no Moderna nor Pfizer equivalent for debt.
As a New Yorker, I would love to have Speaker Pelosi charge her California constituents for New York’s fiscal mess. But, that wouldn’t be fair, now would it? Given our Federal system, to do so would be just WRONG. Every state and every locality has the authority to act on its own. In fact, they take offense when anyone else tries to tell them what to do. So, why now do they want the Federal taxpayers to bail them out?
Virus or no virus, if you can’t pay your pensions and health care benefits, if you can’t afford to pay for current services–because of a legacy of irresponsible behavior over the years–you really should NOT be able to charge the bill to someone else.
This means, whether you are the MTA or New York City, Chicago or Illinois, New Jersey or California, clean up your own mess!
Charging Federal Taxpayers For State Problems is Unconstitutional
We all know stealing is wrong. So, using the electoral system to accomplish the same is no better. If we want the right to vote we should accept the fact that the problems we create are ours alone to solve.
In fact, state bailouts are, in my view, unconstitutional. We value the right to vote, we insist on it. It is embedded in our DNA, and this includes Taxation without Representation. If Chicago thinks someone in New York or Texas should pay for local expenses, New Yorker’s should be entitled to participate in local elections.
So, let me turn to the fact that we are now living A.C. (after Covid) where financial costs of this pandemic are escalating. It is a crisis of epic proportions and, leaving aside questions of origin, it is essentially a crisis without responsibility.
The popular argument in government and politics is “never let a good crisis go to waste.” As such, politicians argue free stuff is justifiable given the extraordinary difficulties in which we now live… .and, as such: HELLO Emergency authorization!
The pandemic has not only lead to an accelerated path to vaccine development (which is good) it also has created political cover for massive financial assistance from the Nation’s capital (which is bad.)
In the shadows of a real catastrophe the have-nots are throwing the kitchen sink into their requests for relief. “Please sir, may I have another trillion. Or two. Or Three.”
The vast and horrific impact of the pandemic is the primary reason requests for such massive aid packages are resonating and have hit such a responsive chord. But, there is something lost in the harmony….these chords are drowning out the melody of principle and reason.
So, it’s time to wake up America. We need to play fair and sing in tune.
The Solution
Instead of “checks for free,” why not enable the states to BORROW the money from the Federal Government at cost? That way, each state and its’ citizens would stand on their own. As we know, interest rates are at historic lows, and the U.S. Treasury in general has access to money at the lowest borrowing rates of all, so debt service costs would be low. With that in mind, the states could borrow sizeable amounts for terms measured in decades. It would give states the ability to address their own problems, the time to do so, AND it would preserve a badly needed sense of fairness so the states still have some skin in the game.
