I heard some politician here the other day make the statement that if revenues are down (and he stated they were due to the majority coming from income tax)that the only answer would be to raise sales tax.
They just don’t get it. How about not building anymore parks, rec centers, adult centers, stadiums, etc? Things that are nice but not necessary.
I hope people consider the possibility that the states have been given a piece of cheese on a mousetrap, and they happily ate it without regard for the consequences. Many of the states are now like welfare mothers at the mercy of the national govt. and by extension, the Fed.
This is likely to end, eventually, with states being “bailed out” much like GM and the huge banks. Bailed out by who? Well, the national govt...but in reality the fed, which is not really a part of the govt, in many ways you could say they are above the govt.
Local communities have fallen for this to, by making exotic investments with pension funds and bond issues. So all the legitimate talk of state and local government standing up for themselves and reasserting their roles has a roadblock in that they have become just like a huge percentage of the country, dependent on the state through debt.
In Europe the move has already started to use pension funds in the same way the US has used social security. Private pensions you say? Well, the funds here in the US are invested which gives the Fed the power to do with them what they want. The “reforms” of the last few years have done nothing but increase the control of the biggest of the big banks. They can technically shut down any BUSINESS they want, not just banks.
As the financial crisis pushes further and includes the states, rather than creating an opportunity for the states to reassert themselves, most will go with their hat in hand to the national govt and the fed and, in a de facto manner, sign away many remaining powers.
Much like the states technically still have power over education except for one detail........federal money...printed by the fed out of thin air.
This is just a further chapter in a kabuki theater that has been going on since 1913.
Cutting taxes and some spending is great, but it really is like changing the top layer of icing on a 3 foot tall wedding cake.
In Omaha, as everywhere, money is a problem. So the mayor put out a budget that included something like $1.5 million to “fight truancy”. The population of the city, proper, is maybe like 400,000. How much truancy can there be? Why should the city pay for it? (My data could be “iffy” on this stuff, it is all IIRC.) Anyway, he just does NOT GET IT, and therefore a recall election is to be held on 1/25/11.