In a New York Times op-ed, Chris Edley rightly warns that state budget cuts and tax increases are undermining federal efforts to boost the economy; that’s why we’ve recommended (most recently here) that Congress extend the state fiscal assistance in last year’s Recovery Act.
BEYOND THE NUMBERS
Those who are blaming states for their severe budget shortfalls and arguing that Congress shouldn’t provide much-needed assistance until states “clean up their act” (here’s a recent example) are wrong on both counts.
Jon Shure, deputy director of state fiscal policy, appeared on the CBS Evening News with Katie Couric to discuss implications of the budget problems states are facing in the recession, including the potential loss of 900,000 private- and public-sector jobs due to budget cuts.
Today, we sat down with Senior Advisor Iris Lav to discuss property taxes, and good and bad ways to address concerns about rising property tax bills.
The new fiscal year starts in most states tomorrow, but don’t expect governors and state legislators to mark the occasion with champagne. From Augusta to Austin, Tallahassee to Sacramento, the mood is dour.
Combining bad economics with bad fiscal policy, opponents are on the verge of defeating the compromise jobs bill before the Senate, and we can expect more hardship and a slower economic recovery as a result.
As I’ve said before, the case for extending unemployment insurance (UI) benefits and state fiscal assistance is powerful:
When New Jersey Governor Chris Christie claimed that his proposed budget would “protect and care for the most vulnerable among us,” he apparently was referring to the state’s millionaires rather than its low-wage workers.
As Ezra Klein’s research desk explains, most studies show that rich people don’t flee higher-tax states for lower-tax ones and “the revenue generated by state tax increases on high earners overwhelms that lost from taxpayers’ leaving.” (Brad DeLong and Matthew Yglesias also discuss this issue here and here.) In fact, raising taxes on the highest-income households — a group that’s enjoyed the greatest rise in incomes and the greatest decline in taxes in recent decades — is a sensible and effective way for states to help offset the huge drop in revenues during the recession.
“Most striking is the sense of political paralysis in both chambers and an almost visceral hunkering down in the face of the tough choices ahead,” Politico’s David Rogers wrote this morning regarding the Senate’s failure thus far to approve pending jobs legislation.