The Truth about State Budget Deficit Crisis

What can States do about the budget crisis.  Almost all of the states are facing a budget “crisis.”  The bottom line is, most are all bankrupt.  Currently, their solution is to cut, cut, cut spending in order to balance their budgets.  The other brilliant idea they have is to raise taxes on those who still have a job and then raise taxes on items that are already taxed.

States are in somewhat the same position that individual households are in, that is, they have to operate on a balanced budget. (at least that’s the way it’s supposed to go).  States can not create money the way the Federal government can.

Job losses = revenue losses

Look at how many jobs were lost in all the states over the last 20 years or so.  I’m talking about the high paying job that can support a family.  I’ll term this a dignified wage, a wage that can support a family and pay taxes to the government, local state and federal.  Many of these dignified wage jobs have gone overseas.

And the jobs which depended on the jobs that went overseas are lost as well, a secondary job loss effect.  These are feeder industries, the subcontractors, the restaurants and other businesses that supported the companies that left.

So, the states have lost all that revenue in the form of lost taxes.  The companies themselves that left, the workers, the feeder companies and their workers all paid taxes to the state government.

Now, they are in a “budget crisis.”  The real truth of the matter, then, is that the states are in a revenue crisis, not a budget crisis.  Yet, I don’t see any governor or state legislature addressing it from that standpoint.

It’s a Federal Problem

If they are not criticizing the federal government for allowing the jobs to go overseas just so the corporations can make a higher profit, then they are not addressing the real revenue crisis.  The states don’t have the power to legally stop that from happening, but the federal government does.

The federal government is supposed to protect us, the citizens, from this job loss, wage cuts, loss of insurance, loss or purchasing power, etc., yet they have been complicit in sending jobs out of the country for the benefit of the corporations’ bottom line.  And, the same federal government that says it can’t afford to help the states is the same government that has bailed out the swindlers on Wall St. to the tune of trillions and trillions of dollars.

So, if the states (governors and legislatures) are not fighting politically for the federal government to stop the job loss, and to start increasing revenue, then they will always be stuck in a downward economic spiral of budget cutting and raising taxes.  And the cuts in health care and services are now literally killing people.

Every state election will be reduced, kind of like it is now, to a contest of who will be more brutal and heartless in the budget cuts.  Who can think of more “useless eaters” to cut out of the system.  All candidates talk about creating jobs, but no one has a serious, viable policy to do that.  So, in effect, when candidates say that, it’s a lie, weather they are doing it intentionally or not, they are lying.

The problem is that the economy is collapsing as a whole.  The states did not create the revenue problem that they have.  And without a serious policy to revitalize the agro-industrial base of the economy along the lines of a Roosevelt style recovery, it’s a continuing downward economic spiral of budget cuts, services cuts and lay offs.  It’s the “thirdworldization” of America.

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