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Conservatively Speaking

State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.

Oh, no, not another stimulus!

Economy, Taxes

 

January 2010. The blaring Associated Press headline confirmed the predictions of many people:    

Unemployment Unchanged by Projects

Billions of stimulus dollars for roads, bridges didn't chop unemployment


The Associated Press reported, “A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama's first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an urgent need to accelerate job growth. An Associated Press analysis of stimulus spending found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.”

The $787-billion stimulus failed to deliver as advertised and promised. So what does Washington do in response? It trots out yet another stimulus package disguised as a jobs bill. The American Jobs and Closing Tax Loopholes Act of 2010 will cost $174 billion.

Will this new effort create jobs? The previous stimulus package didn’t. In addition to the new jobs bill, the White House and Congress are considering another stimulus bill that will only hurt, not help state governments.

Repair state budgets and create jobs. Those were the ultimate goals of the 2009 $787 billion stimulus. Both marks were missed badly.

Some governors and state legislators, including myself, were deeply concerned that the huge amount of money flowing from the nation’s capital to the states would run out, leaving states holding the bag without the means to support and afford expanded programs. Unfortunately, many governors and state legislators, couldn’t wait to grab the carrot off the stick.

State budgets remain in shambles despite the stimulus. Wisconsin, according to the Legislative Fiscal Bureau, has a deficit this biennium of $10 million. The next biennium, the structural deficit is $2 billion, 329 million.  Additionally, a study by the American Legislative Exchange Council (ALEC) found that every additional dollar of state aid from Washington D.C. increases state and local budget deficits by 62 cents. So much for that federal life preserver.

Job creation? The stimulus intent was to keep unemployment lower than eight percent. Instead, unemployment kept growing.

Renowned economists Arthur Laffer, Stephen Moore, and Jonathan Williams in a new ALEC report offer reasons the record infusion of federal funding only served to exacerbate state budget woes.

1) Temporarily, the stimulus made state lawmakers’ lives easier. Gone for the moment was the fiscal responsibility to make tough choices. The economists emphasize states, because of the stimulus, ignored the recession wake-up call and continued spending.

2)  States, including Wisconsin, shunned spending cuts. Instead, they expanded their budgets, a devastating trend our state is experiencing that needs to stop. Stimulus funding will continue to trickle in at declining levels making future budget cuts more difficult. The result, according to the economists will be a “budget cliff” causing, in their words, “jarring state fiscal crises this year and next.”

3) The stimulus failed to prevent tax increases. The National Association of State Budget Offices reports more than half of the states raised taxes and fees during 2009. Here at home, the tax increases from the 2009 budget adjustment bill plus the tax increases in the 2009-11 state budget total, according to the Wisconsin Taxpayers Alliance, $3.03 billion.

 

4) Strings attached to the stimulus limited what states could do with the funding. Stimulus requirements prevented states from making certain cuts in key programs like highways, K-12 education, and Medicaid. The economists write, “Let it be known that the 2009 federal stimulus bill arguably turned out to be the greatest power grab by the federal government and usurpation of states’ rights in decades. It allowed Congress to dictate to state lawmakers what programs in their own budgets they could and could not cut and by how much.”

If the feds really want to help states like Wisconsin, the three economists suggest Washington cut federal spending and federal tax rates, promote a strong national economy with healthy, profitable businesses and plenty of hiring.

Noted conservative columnist Thomas Sowell related an anecdote about one of our most famous presidents in one of his pieces during March 2010:

“Abraham Lincoln once asked an audience how many legs a dog has, if you called the tail a leg? When the audience said ‘five,’ Lincoln corrected them, saying that the answer was four. ‘The fact that you call a tail a leg does not make it a leg.’ That same principle applies today. The fact that politicians call something a ‘stimulus’ does not make it a stimulus. The fact that they call something a ‘jobs bill’ does not mean there will be more jobs.”

Another stimulus package? I sure hope not.

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