- The Washington Times - Wednesday, February 4, 2009

ANALYSIS/OPINION:

COMMENTARY:

President Obama and Congress propose spending billions to bail out the states, and they have the audacity to call it a “stimulus” package. They have taken up the mantle of the “pushover parent” who bails out the kids every time they make a poor choice or use up their allowance too quickly.

The “pushover parent” fails to recognize that preventing a child from suffering the consequences of his or her choices is a far more war-torn route in the long run. The shortsighted, ill-advised,and over-eager enthusiasm toward a federal bailout of the states will bring severe consequences for us all.

First, Congress has no money; it will either have to borrow and pay interest or have the Federal Reserve print more money and in turn see inflation rise dramatically in six months. Second, the congressional plan will stymie private sector jobs and personal freedom while boosting big government and public sector jobs. Unfortunately, government cannot create jobs without destroying them in another sector.

Further, the question of how we arrived at this dismal condition, though vitally important, has been glossed over by Congress and the executive branch without so much as a twitch. States are not facing budget shortfalls because they don’t tax enough. The problem is out-of-control state spending, which has grown 2 to 3 times the rate of inflation. In fact, in the last 10 years, state spending is up 124 percent and state debt has increased 95 percent.

A federal bailout, like that of a pushover parent, sends a message that states (children) don’t have to be responsible for their out-of-control spending (behavior). The difference between a federal bailout and pushover parent bailout is that the parent uses his own bailout money, but the federal government uses yours. Why should taxpayers be forced to rescue states that have mismanaged taxpayer dollars?

The best fiscal advice we could give the states: When you are in a hole, stop digging. States must stop spending and refuse federal dollars that will temporarily pad their budgets while adding to future deficits.

Governors don’t just want a one-time bailout of federal funds; they are looking for a permanent increase in federal spending. Governors are overlooking the fact that federal dollars come with strings, and those strings often tangle states into a noose.

Past federal bailouts of the states have resulted in decreased state sovereignty, encouraged future fiscal irresponsibility and rewarded the most fiscally irresponsible states at the expense of fiscally responsible states. A federal bailout significantly erodes the constitutional “Republic” form of government. It will mean state legislators will lose their ability to control the state budgets - Congress will, in effect, control many aspects of state spending.

Rather than heap ashes from border to border and wail for a bailout, states should take advantage of their budget shortfalls to reform state spending and discontinue low-priority programs. Legislators need to cut spending and cut taxes to encourage private sector jobs. The federal government should offer states more flexibility and freedom from federal mandates. The Cato Institute has noted that “long-term economic growth comes from work, investment, entrepreneurship, and innovation” - not more government spending.

Bob Williams is founder and senior fellow of Evergreen Freedom Foundation (EFF), a free-market think tank based in Olympia, Wash. Amber Gunn is director of EFF’s Economic Policy Center.


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