Why Utah should expect ongoing drops in federal funding

With sequestration now in place, federal funding for low-income and special education students, national defense (read: Hill Air Force Base), and for local government programs and services will be decreasing, with impacts which have yet to materialize. The impacts may be severe, or they may not be as bad as some believe – only time will tell.

But while the actual impact of sequestration is as yet not fully known, one thing seems more certain: Federal funding to public education, national defense, and the poor will continue to go down.

This is because, as columnist Robert Samuelson articulately points out in a Washington Post opinion piece, the single biggest factor in the federal government’s spending problem – namely federal retirement programs, such as Medicare and Social Security – is politically off limits. As Samuelson points out, the sequestration policy, consisting of significant cuts to everything except Medicare and Social Security, is a manifestation of this political reality. Further, no one in power in Washington is seriously calling for significant changes to these retirement programs any time soon. President Obama seems to see no reason to even have a serious conversation about the issue, and even Rep. Paul Ryan’s budget doesn’t enact Medicare reforms until 2024. Read more

Budget deal? It’s just more spending

In these weekly commentaries I try to stay pretty even-keeled but the whole “fiscal cliff” mess has driven me over the edge. The nation – the American people – are $16 trillion in debt – $16 trillion with no hope for reductions on the horizon. And, just so we’re clear, what Congress and President Obama just agreed to only makes matters worse.

But before I hit the roof, let’s keep budgets and debt in perspective. When we anger over such things it’s easy to forget that balanced budgets and zero debt really never have been the standard. Since 1791, when we first started keeping track of national debt, officially, the United States was in debt to foreign powers to the tune of $1.8 billion (in current dollars). In other words, the U.S. always has run a debt to one degree or another. Of course, periods of war (and there have been many since our founding) increase the debt most dramatically. But I should note that the decision in the 1960s to create the modern welfare state has taken this country to new levels of debt.

Budget surpluses are also rare at the federal level. From 1940 to 2013, a 73-year period, our federal government ran a budget surplus only 12 times. Out of six dozen years, Congress ran a budget surplus only a dozen times.

And I should add that while I support a constitutional amendment requiring balanced budgets, we need to be clear that politicians who want to spend your money will always find a way around any limitation to do so – always. Read more

Spending pledges vs. spending limits

Grover Norquist in 2011. (Photo: Gage Skidmore)

As Congress begins to drive America off the fiscal cliff, the politics of taxes and spending will reach new levels of absurdity. Over 20 years ago a young upstart in Washington, D.C., Grover Norquist, began an anti-tax campaign calling on every senator and congressman to sign a pledge that they would never vote to raise taxes. Nearly every Republican and many Democratic legislators have signed this pledge but with the fiscal cliff imminent, many members of Congress are starting to second-guess their decision.

Here’s what this sort of politics sounds like. Republican Senator Saxby Chambliss from Georgia says, “I care more about my country than I do about a 20-year-old pledge.” To which Grover Norquist responds, “Senator Chambliss promised the people of Georgia he would go to Washington and reform government rather than raise taxes to pay for bigger government. If he plans to vote for higher taxes to pay for Obama-sized government he should address the people of Georgia and let them know he plans to break his promise to them.”

Folks, the politics of the fiscal cliff is going to get ugly. But there are some simple realities about taxes and spending. First, there’s nothing inherently wrong with raising taxes – just as there’s nothing inherently wrong with lowering taxes. A free society needs government. The questions we face about government regard its size and scope. What are essential needs and what programs are nonessential? Read more

Interim Day: Grim impact of fed spending cuts on schoolchildren

At the Education Interim Committee on Capitol Hill this week, the committee heard a presentation about the potential impact of the pending federal sequestration policy on Utah’s public school and higher education systems.

The sequestration policy would be enacted early next year if Congress and the president do not reach an agreement to avoid it, and the policy would mean across-the-board federal spending cuts, including cuts to federal education spending, with the intent of lowering record federal deficits.

One legislator in the interim committee meeting noted that even if sequestration is avoided, it will not necessarily mean that federal education spending is held harmless, as any such agreement to avoid sequestration is likely to come only by changing across-the-board spending cuts to more targeted spending cuts, which are also likely to hit public schools in Utah.

It was a rather grim presentation for children in Utah’s public schools, to say the least. Read more

State tax revenue update shows a “marginally” improving economy and outlook

The latest tax revenue estimates reported to the Legislature’s Revenue and Taxation Interim Committee today showed that general and education fund revenues (mostly sales & use tax and personal/corporate income taxes, respectively) for fiscal year 2011 came in $80 million higher than originally projected. Additionally, transportation fund revenues (mostly gas taxes and automobile-related fees) are estimated to be $10 million lower than originally projected. These are still preliminary estimates, so the final numbers may yet change, but they indicate an economic environment that is improving, although slowly.

One legislator summarized what these figures mean for Utah’s economy by saying that property values and unemployment in the state are improving “marginally.” There was agreement with the sentiment that Utah’s economy is improving, but only slowly.

Limited government = more jobs, higher incomes, better services


Would you support an amendment to the Utah Constitution that means thousands more jobs for Utahns, lets Utah families keep more of their income, and ensures that important state government services are prepared for natural disasters or emergencies?

An amendment to enact reasonable limits on growth in state government spending, based on growth in population and inflation, would deliver exactly that. Read more

Today’s government-bungled finances echo economist’s warning of 65 years ago


Standard & Poor’s recent decision to downgrade the credit rating of the United States government from AAA to AA+ contributed to the biggest drop of the Dow Jones Industrial Average since December 2008. Gross national debt is at $14.5 trillion. Unemployment is 9.1 percent. And the government-owned Freddie Mac mortgage finance entity is asking for another $1.5 billion from taxpayers. According to Reuters, “Freddie Mac has drawn $65.2 billion from the government [read: taxpayers] since it was taken over at the height of the financial crisis in September of 2008.”

Clearly, federal bureaucrats from decades past until the present have failed as stewards of the taxes they take from the world’s greatest source of wealth: the private citizens of the United States. Though the questions and recriminations are innumerable as to the causes and possible solutions, this post addresses just one: Why shouldn’t government get involved in lending money? The federal government’s role as lender and banker has contributed substantially to the current fiasco. Is this a role government should play? Read more

Budget deal: Utah still addicted to the federal trough


A year and a half ago I wrote an article for the Standard-Examiner about how Utah is addicted to federal dollars. Since then, nothing has changed. The federal budget deal has again brought this issue to our attention.

A Deseret News article yesterday highlighted how Utah Transit Authority officials, “advocates for Utah’s poor and disabled,” leaders of the Utah Public Employees Association, Hill Air Force Base officials, and State Superintendent Larry Shumway are concerned that the newly signed budget deal could decrease federal funds available for the programs they support. In a related article, Mayor Ralph Becker expressed concerns that the budget stalemate could jeopardize $26 million promised for Salt Lake City’s two-mile streetcar extension. Read more

Education spending and the danger of narrow policy thinking


On Friday we wrote about not trying to “keep up with the Joneses” in regard to public education spending. Today I’ll make a few more observations about recently released spending data.

A story from the Salt Lake Tribune recently highlighted a research report from the Utah Foundation showing howUtah’s K-12 public education funding effort has declined since the 1990s.

In the report, “education funding effort” is defined by one piece of data: public education revenues per $1,000 of personal income. In other words, “education funding effort” is based on how much government takes from Utahns’ income via taxes in order to give money to public schools – and the more “education funding effort” the better. Read more

Don’t mind the Joneses; do what’s best for Utah


Trying to keep up with the Joneses can be damaging to one’s home environment – and to a state. Oft-expressed concerns about Utah’s public education funding highlight what I mean.

According to a new Utah Foundation report, Utah continues to spend less per pupil on public education than any other state and has fallen from 8th to 26th in education spending as a portion of personal income since 1992. For some reason, how Utah compares with other states is typically the focus of most conversations about Utah’s public education spending efforts (for example, see here).

While state-to-state comparative analyses may be informative and useful in some ways, to argue that Utah should spend more on public education, or on anything else, simply because other states, or all states, or the whole world, spend more than we do is illogical. Read more