About half the nation’s governors are descending on Washington to do what politicians do best: beg for dollars. The primary purpose of this year’s National Governors Association (NGA) meeting is to blame Congress for the state’s financial woes and to rally support for a federal bailout of their states. But for once we have a case where Washington isn’t to blame for the crisis in state finances. Hopefully they’ll return to their state capitals empty handed despite their full-court press to raid the federal treasury, which, if they haven’t noticed, is also running on empty these days.
States are broke because they have been irresponsibly spendthrift. Since 1990 most states have doubled their budgets — making the 1990s one of the biggest spending decades ever for states. In the late 1990s the states even managed to outspend Bill Clinton and the United States Congress, as state expenditures grew at almost twice the pace of federal expenditures.
But that isn’t how the NGA sees things. What was once a force for states’ rights and a useful check against unwise federal meddling in domestic affairs has become a special-interest group that views Uncle Sam as a convenient ATM machine to pay for expansions of state government. And what is most amazing is that this ever-more pronounced left-wing tilt of the NGA has occurred during the years when Republicans took control of the majority of the governorships. The problem is that Republicans never cleaned house at the NGA. The group still has a liberal Democratic staff that spends all its time lobbying for crackpot ideas like taxing the internet and reinventing federal revenue sharing.
In the last two years the NGA has attacked President Bush’s tax-cut policies; a stance that has encouraged several governors, such as Jeb Bush of Florida, to stop paying NGA dues. Texas Governor Rick Perry has dropped out of the NGA and George Pataki of New York says he’s next out the door. This should hopefully ignite a mass exodus of Republicans who don’t want to see scarce state tax dollars, needed to balance budgets back home, wasted on lobbying to make the federal government bigger and nosier back in Washington.
Something irrational comes over Republican governors when they start fraternizing with their Democratic counterparts. A few years ago when congressional Republicans were trying to cut the capital-gains tax and reform welfare — two issues that tremendously benefited states — the governors issued a whiney statement complaining that these policies might hurt the poor because federal payments to the states would be cut.
One reason the NGA has never reformed itself is that it has been headed by some of the most pro-tax-and-spend Republican governors. For years the NGA chairman was Mark Leavitt of Utah, who never saw a tax he couldn’t raise. Now the chairman is Dirk Kempthorne of Idaho. Back in Boise, Kempthorne has endorsed the biggest tax increase (as a share of the state budget) by any governor in the country not named Gray Davis. Since Kempthorne has irresponsibly punted rather than make tough spending choices to balance the budget, it’s no surprise that he’s one of the ring leaders in the attempt to blame Washington for the fiscal mess he himself created back home.
The NGA has a new working paper on the state budget crisis. It is filled with half-truths and some highly inventive statistical gymnastics that try to show how states are innocent victims of circumstances beyond their control. Nonsense. No one forced the states to increase spending by twice the rate of inflation over the past five years.
A new Cato Institute report shows that if the average state had restrained spending to the rate of inflation plus population growth over the past 12 years, it would have a combined surplus of close to $100 billion — not a deficit of $100 billion. And if the governors had kept to this restraint on spending, the states would have enough money not only to balance their budgets, but to give every family of four a tax-rebate check of more than $500 this year in excess tax collections. But, of course, this reality isn’t very convenient for the NGA’s fairy tale governors who say they are struggling to make ends meet without opening the prisons and shutting the schools.
The NGA policy document is filled with buffoonery. It recommends that Congress “provide substantial funds to every state and territory.” Then it makes even the more absurd statement that: “The governors believe the most powerful immediate economic stimulus for the nation’s ailing economy is to provide fiscal assistance to the states . . . ”
If fatter state budgets were the solution to our economic problems, we would all be living in fat city today. The NGA says the feds should give states money to avoid state budget cuts. But states should tighten their belts and give citizens lower-cost services after a decade of excess.
If the NGA members had any common sense — and some like Bill Owens of Colorado and Mark Sanford of South Carolina certainly do — they would carry a single mission to Washington: to urge Congress to pass the Bush tax cut. They should stop echoing the economically illiterate statements of polticians like Nancy Pelosi and Tom Daschle who complain that the Bush tax cut “doesn’t help the states.” The truth is the Bush 10-year $670 billion tax cut leaves all that money in the states and out of Washington. How can that not help states?
Moreover, the one and only productive step Congress can take to help balance state budgets is to get the American economy humming again. A big, bold federal tax cut will help achieve that, just as in the early 1980s the Reagan tax cuts created a mountain of gold for state treasuries.
Republican governors should boycott the NGA. They should vow never to return as members and never to commit another dime of taxpayer dollars to finance its tax-and-spend agenda. Washington has no shortage of tax-eaters seeking hand-outs from Congress. The day that America’s governors come to believe that Washington is the solution to all their problems is the day America needs a new crop of governors.
— Stephen Moore is president of the Club for Growth and Grover Norquist is president of Americans for Tax Reform.