House of Eratosthenes

State and local governments are facing even greater budget deficits than were expected a few months ago, according to a new study released Monday by the Government Accountability Office (GAO).

GAO estimates that state and local governments will face a cumulative operating deficit of $131 billion in 2009. Deficits are set to mount in 2010, with the GAO predicting a cumulative deficit that year of $181 billion.

“The current results represent a significant deterioration from our November 2008 update,” according to a GAO letter to Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa). “In November, our model depicted an operating deficit in the $100-$200 billion range.”

But the Golden State is looking better than average, right? Right?

Oh, dear…

Golf course owners and some of their customers are teed off at Gov. Arnold Schwarzenegger. So are veterinarians, auto mechanics and amusement park operators.

Their anger is directed at the Republican governor’s proposal to extend the state sales tax to cover more services, an idea that has surfaced in other states as they race to plug crippling budget deficits. The Center on Budget and Policy Priorities, a research clearinghouse, predicts such deficits nationwide could reach $350 billion by 2011.

In California, Schwarzenegger wants to help close a nearly $42 billion budget deficit by taxing rounds of golf, auto repairs, veterinary care, amusement park and sporting event admissions and appliance and furniture repairs.

Democratic Gov. David Paterson in New York has proposed levies on MP3 downloads, taxi rides, movies, concerts, sporting events, and personal services such as haircuts, manicures and massages.

Best-comment-award in that thread, goes to Thomas Paine (#8) —

One of the dirty little secrets of social welfare agencies is that they are under NO incentive to reign in the number of people or the scope of services that they provide. You have a classic positive feedback loop. The more people on the dole, the more kids with an ADD diagnosis, the more illegals they can give a Medicaid Tax ID number to so they can get free medical care for life, and the more crackheads who can get signed up for SSI benefits, the more social workers get hired, with larger and larger budgets.

And don’t forget the biggest scam of all: if you’re pregnant, you come to the good ol’ USA illegally, get free prenatal care, get your baby delivered for free, and to top it all off, your baby is set for life with guaranteed Social Security benefits! Then you, your spouse and all of your relatives apply for citizenship to help with raising your baby, and YOU ALL can get benefits, too!

There are PLENTY of goodies to go around, ,even for older kids who missed out on citizenship. Just come to America and get free K-through-12 education! And when it’s time for college, don’t worry. The liberal legislators of many states allow you to get the lower in-state tuition rate! To think, not even an American citizen war veteran from the next state can qualify to get the same perk for his or her kids!

You don’t even have to be smart to figure this out. You just need a decent memory.

You get to wallow hip-deep, shoulders-deep, neck-deep, in news about how bad your state’s treasury is doing. Budgets late, state workers furloughed, deficits forecast…

…and then you read some more news about your government spending money to make sure people who are eligible for a program, know about their eligibility, so they can cost the state some more money. Yeah. Just like the way you balance your household budget. Spend money to spend money. Of course you’re doing something like that, right? When you have more outgo than income? You call the phone company or cable company and complain they forgot to include a past-due balance in your bill?

Alarm bells ought to be going off. There’s something wrong with you if they aren’t.

It is always disappointing to me to see that they will just keep raising taxes, instead of decreasing spending. It’s like they can’t see that they’ve far exceeded the point of diminishing returns, where it makes more sense for businesses to move offshore, citizens to hide their income, and people to turn to barter to avoid taxes. We’re doomed.
- muttley | 01/27/2009 @ 13:01
I’ve about decided we should come up with this for a tax plan:

The federal government’s revenues should be tied to a certain, FIXED percentage of the GDP. Same with the States (tied to the state’s GDP). Municipalities may be left to set their own tax rates.

Let’s say the Federal government gets 10%, and state government gets 10%.

That, then, is indexed to individual/household incomes, and there’s your tax bill. The poverty level is indexed as well, and those below it pay no taxes. Of course, this will necessarily figure in to the index for the rest of us.

Then, the government has a budget. When it runs out of money, it’s out of money, just like the rest of us.

Thing is, if this were the tax plan, government’s insatiable need for more and more money can only be accomplished by a rising GDP. What’s good for the goose is good for the gander. We make more money, they make more money. And they’ll soon find that staying out of our way is the best way to make that happen.
- philmon | 01/27/2009 @ 13:40
I forgot to mention, the same goes for corporations. 10% of the national GDP indexed to their revenue’s contribution, and 10% to the state in which they operate. If they operate in multiple states, that gets divided between those states by a similar formula.

Maybe it’s not 10. Maybe it’s 8. Or 15. But it’s FIXED.
- philmon | 01/27/2009 @ 13:46
Incidentally, the Golden State may be the first State to fall the way New York City did in the 1970’s…. which is covered in William E. Simon’s book I mentioned in another post, “A Time for Truth”.

Eventually, the country will go the same way. And it’s not far from it.
- philmon | 01/27/2009 @ 13:53

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State Deficits Looking Bad, Bad, BadTuesday, January 27th, 2009

State Deficits Looking Bad, Bad, Bad
Tuesday, January 27th, 2009