When we started 2012 by raising the debt ceiling there was a lot less noise from Capitol Hill than we heard last summer when legislators predicted catastrophe caused by their own reckless spending. Last August Congress pacified taxpayers by pawning off its responsibilities on a sure to fail Super Committee and a doomsday automatic spending cut scheme. Were the outbursts muted this year because lawmakers were afraid too big of a stink would bring back memories of our credit downgrade before the election? Were they concerned about more questions being raised over the cost of the Affordable Care Act as the 2014 deadline approaches? After the usual posturing and a failed Republican attempt to head off the inevitable, the president and Senate Democrats got exactly what they wanted. America got a new debt ceiling of over $16 trillion. Those responsible forged ahead with new plans to spend and never looked back.
With January’s debt hike long over, Washington is waiting out the 2012 election season while President Obama comes up with fresh ways to sell the usual snake oil. The president is keeping his call for a tax increase fresh in supporters’ minds so he can justify aggressive spending as an alternative to a Republican budget proposal he criticizes for creating less government:
And the government is shrunk to the point where things that we take for granted as a society — as an advanced, responsible society — are gutted: education, science and research, early childhood education, caring for our environment, looking after our veterans, keeping up with our infrastructure, rebuilding our roads and our bridges so that they’re safe, food safety laws, our capacity to enforce basic consumer protections.¹
Responsible society? We ran up a deficit of $780 billion in the first half of this fiscal year while spendthrift Democrats paved the way for more debt. Harry Reid’s Senate slammed Republicans for proposing spending cuts that put states in jeopardy, charging in a press release that the Republican budget Would Place Huge Cost Burden On Cash-Strapped States, Pressuring Governors To Raise Taxes.²
Massive state tax hikes might be exactly what this country needs to force taxpayers to dig in their heels. State debt is dragging us down just as surely as Democrats will spend if they can tax or borrow. Illinois showed us last year how even retroactive tax hikes do little to solve worst-case debt problems caused by years of irresponsible budgeting and feckless legislatures who have forgotten who they answer to (see: Live in Illinois? Get Out Now.). As long as Uncle Sam pays for bailouts disguised as essential funding for social services, public employees, and entitlements, states will never step in line.
While Democrats charge that the Republican budget could cost 30 million Americans their Medicaid benefits,³ the Government Accountability Office pointed out that states that pay less for Medicaid now will probably see their outlays go up because of the health care law,4 which traded the public option for more Medicaid. We don’t know what the Affordable Care Act will do to state and federal budgets, or how employers will respond until the exchange provisions take effect. The warnings keep coming in about inaccurate estimates, flawed projections, and higher costs. If Democrats score a big victory this fall and the Affordable Care Act stays on track, President Obama will be almost finished with his second term before we can begin to know the extent of the damage caused by his health care overhaul.
We do know that the news on state and local budgets keeps getting worse. Ironically, this encourages the president’s congressional accomplices to escalate their demands for more spending to make up for the sagging recovery. Do we allow states with catastrophic debt to drag down the rest of the country by forcing taxpayers in every state to throw into the federal bailout pool, or do we cut them loose, and let their legislatures transfer the pain to their own residents?
Democrats argue that:
If Republicans get their way, Americans would lose $1.7 trillion in health benefits, including $550 billion for seniors, and 30 million could see their coverage cut entirely.5
In a state-by-state accounting, they charge that Illinois will lose $55.6 billion,6 California $167.1 billion,7 Wisconsin $28.8 billion,8 and New York $148.2 billion.9
States like California, Illinois, and New York charted their own destinies. They can live with their decisions. All three have enough money to fund in-state tuition for illegal immigrants. California recently passed a law granting taxpayer-funded financial aid for illegals, and Illinois has approved its own DREAM Act (see: Illinois DREAM Act: Smarter Illegals, Better Frauds?). Public employees call the shots in Illinois and California, while Wisconsin is holding a recall election in June to get rid of a governor who tried to make public employees affordable by standing up to unions. Why should taxpayers in other states encourage this kind of recklessness with their federal tax dollars? At the federal level we are at least afforded the illusion of having a voice at election time. When a taxpayer in North Dakota is forced to fund a tuition break for an illegal immigrant in New York because that state is receiving aid from Uncle Sam, that taxpayer has no recourse. The only solution is to cut states loose. End the bailouts in their many guises, or at least attach chains to the money. With pain comes wisdom and change, and maybe even a measure of fiscal restraint.