What Is Obama's Long-Term Plan to Rival the Romney/Ryan Plan? (user search)
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  What Is Obama's Long-Term Plan to Rival the Romney/Ryan Plan? (search mode)
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Author Topic: What Is Obama's Long-Term Plan to Rival the Romney/Ryan Plan?  (Read 6702 times)
anvi
anvikshiki
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« on: August 14, 2012, 10:04:40 AM »
« edited: August 14, 2012, 10:19:13 AM by anvi »

http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png

http://www.usgovernmentspending.com/state_spend_gdp_population

Just a little though-experiment here.  In the 2011 federal budget, non-military discretionary spending stood at $646 billion.  What would it mean for the states if we cut all that spending?  How about one "equal" but unrealistic scenario, and one less equal but more realistic one?

Even splitting that spending evenly among the states (an utterly unrealistic scenario, I know, but bear with me for a moment) would add $12.9 billion to every state's spending obligations if it wanted to make up the difference.  That figure is greater than the amount of money that state governments spend in total in eight states, more than half of what seven additional states spend, more than a third of what four additional states annually spend, and more than a quarter of what 9 more states spend.  In other words, over half the country would either have to massively increase revenues in order to replace non-defenese federal discretionary spending, which of course would mean dramatic hikes in state tax rates, or cut so many services in a state so as to cripple economic activity anyway.  

But let's say, to be more realistic, we assign less burden to states with the smallest spending budgets like South Dakota, shrinking their cut of discretionary spending to the tune of, say $3 billion (since they spend 61% less than does the highest spending state in the union, decreasing their share of the burden by 75% seems like a good deal for them).  The problem is that $3 billion is still nearly half the equivalent of that state's total spending of $6.9 billion.  Let's say, using the same logic, we increase California's share of the burden by shrinking their cut of discretionary spending by $18 billion (since, again, that state spends 61% more money annually than does South Dakota and saddles California with only .7% more responsibility for all the discretionary cuts than splitting up the burden equally would--a good deal for them).  That still takes an additional 4% out of the California state budget, which is already quite cash-strapped.  The larger point is that proportionally divvying up the burdens caused by slashing all fed non-defense discretionary spending would still mean absolute murder for small states even if the larger ones might have a chance to get by.  People in small states won't be able to vote with their feet, because they won't even be able to afford a Greyhound ticket after they're gutted that brutally.  That's not a proposal for a strong America, it's a recipe for civil war.

The lesson is that, in order for the massive spending cuts that we certainly need to make to be bearable, we need to spread them across the entire budget, and even then in complicated ways.  This is an area where platitudes will solve nothing.
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anvi
anvikshiki
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« Reply #1 on: August 14, 2012, 10:18:31 PM »

Politico,

To use two states you give as examples of being willing to let discretionary dispersements from the feds go, in FY2012, South Dakota is faced a budget shortfall of $127 million, representing 11% of its budget, and Utah a $390 million shortfall, a little over 8% of its budget.  See the chart about halfway down this essay.

http://www.cbpp.org/cms/index.cfm?fa=view&id=711

In order to address its shortfall, South Dakota drastically cut funding for state schools and reimbursements to hospitals caring for the poor.  But this year, the state, with the Republican governor's blessing, decided to boost its spending back up to the tune of just under $4 billion to meet the needs that accrued from these rollbacks, and $1.75 billion (almost half) of that money was federal money, and a pretty big percentage of that, especially the money devoted to shoring up the schools, came from federal discretionary spending.

http://www.necn.com/03/16/12/Gov-Dennis-Daugaard-signs-4-billion-SD-b/landing.html?&apID=6011bfee347f4720aafa74427502b483

In the case of Utah, take a look at the state budget pie charts on page 5; note that, as indicated in the top chart, federal dollars make up 25.1% of the state budget, a larger share than any other source of revenue.  Then glance down at the bottom chart and note that the state's biggest budget item is public education.  Federal discretionary spending dollars make up a sizable portion of that spending, particularly since Utah has made a point to not fund public education through nearly as much bonding as other states.  

http://governor.utah.gov/budget/Budget/Budget%20Summaries/FY%202012_SumBk.pdf

If I was president, and I told governors and state legislators in South Dakota and Utah that very large chunks of federal discretionary dollars were going to abruptly disappear for good, they would do a lot things to my face, but laughing wouldn't be one of them.
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