By Steven Lonegan
Just two years ago, an overwhelming number of Americans voted for “hope”, their goal being an undefined “change”. This year Americans are focused, and are voting with the hope that our lawmakers will change their ways and give us the responsible government we desperately need.
More than a decade of irresponsible fiscal policy has created an unsustainable situation for the United States. Spending is at an all time high, and cutting it is nearly impossible because every federal program has a constituency that lobbies hard to keep it alive. The longer we delay serious consideration of meaningful solutions, the larger the problem will become. The situation here in New Jersey is an excellent example.
According to the think tank, the Center for Budget and Policy Priorities, New Jersey’s 2010 budget gap totaled $11 billion – nearly 40 percent of its general fund. The outlook for 2011 isn’t much better, with the state’s budget gap projected to be nearly as large – at $10.7 billion.
As we are seeing on the national level, crippling levels of debt can have a devastating impact on job creation and economic growth.
According to the Tax Foundation, New Jersey’s annual per capita tax burden is approximately $6,620 making it the 2nd-highest taxed state in America. For all the noise generated between New Jersey’s Governor and the unions, things stand pretty much as they did a year ago.
Economic freedom—characterized by low taxation, minimal regulation, freedom to enter and compete in markets, and protection of persons and property—has been shown to be highly correlated with economic prosperity. For example, in a survey of 40 studies, the economists Chris Doucouliagos and Mehmet Ali Ulubasoglu found that regardless of the sample of countries, the measure of economic freedom and the level of aggregation, there is a solid finding of a direct positive association between economic freedom and growth.
In their assessment of economic freedom in the 50 states, Professors William Ruger and Jason Sorens rank New Jersey the 46th most-free state in the nation.
This may help explain why, according to the American Legislative Exchange Council, New Jersey lost, on net, 418,928 people from 1999 to 2008. This is the 5th-highest level of net out-migration in the nation.
“There is bipartisan concern over the growing deficit but far less agreement over what steps to actually reduce it,” Carroll Doherty, associate director for the Pew Research Center in Washington, D.C., told reporters recently.
In a January poll, 60 percent of respondents told the Pew Center that reducing the deficit should be a top priority – the highest level of concern about spending in a decade of polling.
This year, many congressional candidates are talking about the deficit and our teetering economic foundation, but much of that talk is merely aimed at scoring political points. Few are offering ideas –or true determination — on the tough choices we must embrace to truly reduce the deficit.
Taxing our way out of the problem is not an option. Veronique de Rugy, a senior research fellow at Mercatus Center at George Mason University, examined the increases in taxes necessary to balance the annual federal budget in each of the next 5 years. This year alone, taxes would have to increase by an average of $10,000 per taxpayer in order to pay for all of the federal government’s spending.
That is why many economists and most Americans realize the problem is increased spending. Now it’s time to make sure our elected officials realize this as well.
I’ve recently spent some time aboard The Spending Revolt National Bus Tour. The red and blue emblazoned Spending Revolt Bus is bringing speakers, events, and a mobile activist hub to communities across New Jersey– and hundreds of other locations nationwide – to demonstrate how the federal government’s escalating spending spree is bankrupting American taxpayers.
The federal government is currently spending $112,000 every second. This amounts to $67 million in the 10 minutes needed to take a shower and more than $1 billion in the 162 minutes that the average American spends watching television each day. The national debt has ballooned to more than $13 trillion, and America’s debt is now projected to surpass GDP by 2012 – placing the U.S. closer to the crushing debt load that has engulfed Greece and that has led to that country’s near collapse.
President Obama has tried to reassured anxious Americans that the so called “stimulus” would “revive our economy” and “create 3.5 million jobs” over the next two years. Since then the U.S. economy has shed another 3.1 million jobs and the unemployment rate has climbed to 9.6%. That’s higher than the White House predicted it would have reached even without the stimulus. We cannot spend our way to recovery.
However, proposals like rolling back spending to fiscal 2000 and 2008 levels are worthwhile ideas for consideration since fiscal 2000 was one of the last years with a budget surplus and fiscal 2008 was the last year before the recent rapid increase in spending and deficits.
Spending restraint is not an easy task but we no longer have a choice. Our long term fiscal outlook is unsustainable. It is impossible to state the trigger point for a crisis but by 2080 spending on entitlements alone could exceed total federal tax revenues.
Let’s make those who win in November put OUR money where their mouths are. Let’s make them keep their promises to cut spending and reduce the budget. You can’t spend what you don’t have and if you do, you are in trouble. We need responsible government now.
Lonegan is State Director of Americans for Prosperity
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