New York’s governor takes to the pages of the New York Times to give the awful news: the only true remedy for the state’s fiscal problems is to cut spending.
So we must not let discussions about borrowing distract us from addressing the root cause of our fiscal difficulties — years of overspending. Confronting that structural budget imbalance between expenditures and revenues is the core objective of Lt. Gov. Richard Ravitch’s fiscal rescue plan, even though many have sought to focus solely on the plan’s provision for borrowing over the next three years as a last resort.
Remember that every single dollar the state borrows has to be paid back with interest. Issuing bonds to help close our deficit would mean giving every New Yorker an extra tax burden — a dysfunction tax — for years to come. That would be on top of the nearly $6 billion that taxpayers already pay our creditors each year for the often irresponsible borrowings of the past, leaving less money to finance education, health care and other vital services.
Making $2 billion in recurring spending cuts this year would save more than $20 billion over the next 10 years. Borrowing $2 billion would end up costing taxpayers about $2.5 billion over the same period.
The ceremonial shooting of the messenger to begin in 10…9…8…
I think that’s a realization that more states and the federal government should be reaching.
Without spending restraint raising taxes is no solution, either. The primary streams that most states tax, income, real estate values, and retail sales, have all fallen. If the cost of government continues to rise faster than the streams from which it derives its revenue, it can only do so by further reducing those streams. There is no free lunch.
I am not saying that increased taxes can play no part in achieving fiscal sanity. I am saying that without fiscal restraint tax increases will be in vain.
And it will be terribly difficult to make a credible case for raising taxes to pay for more government spending with as high a proportion of government workers making incomes in the top 1 or 2% of all workers as is presently the case.
