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Written by AIER Research Staff
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Wednesday, 11 February 2009 00:00 |
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More than half the states faced budget gaps as of December 2008, for a combined total of nearly $30 billion. According to Lynndee Kemmet, AIER Visiting Research Fellow, in the February 2 Research Reports, the picture is only going to get worse. In fiscal 2010, total state budget gaps are expected to more than double to around $64 billion.
Maybe much of this shortfall could have been avoided had more state governments followed the recommendations of The Heartland Institute. In 2006, the Chicago-based research institute devoted to free-market solutions to economic and social problems published the booklet Ten Principles of State Fiscal Policy. As states struggle to put their finances in order and increasingly look to the federal government to solve their problems, Heartland’s simple recommendations seem particularly relevant. - Above all else: Keep taxes low. The evidence is clear and has been for many years: High taxes hinder economic growth and prosperity.
- Don’t penalize earnings and investment. Taxes on earning and investment income are particularly harmful to economic growth.
- Avoid “sin” taxes. Taxes on specific goods and services are often unfair, unreliable, and regressive.
- Create a transparent and accountable budget. Focus attention and resources on providing those services that are the core functions of state government.
- Privatize public services. Privatization is a proven way to reduce government spending while preserving or improving the quality of core public services.
- Avoid corporate welfare. Subsidies to corporations and selective tax abatement are questionable politics and bad economics.
- Cap taxes and expenditures. A tax and expenditure limitation (TEL) protects elected officials from public pressure to spend surplus tax revenues during good economic times.
- Fund students, not schools. States and cities that have experimented with school choice have seen gains in academic achievement.
- Reform Medicaid programs. Spending on Medicaid can be brought under control without lowering the quality of care received by Medicaid patients.
- Protect state employees from politics. State and local governments should be prohibited from deducting funds used for political purposes from the paychecks of public workers.
The complete booklet, which is part of Heartland’s Legislative Principles Series, can be downloaded for free from www.heartland.org.
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Privatization allows the people to choose rather than the bureaucrats and commissars. It also costs a lot less.
First, while everyone wants low taxes, at the same time many ask government to deliver more not fewer services. Secondly, privitization has been shown to have limited applications. Government services are seldom considered "profit centers" If they were attractive business opportunities, the private sector would already be offering them. An example is public transit, which in very few instances can be self supporting. Furthermore, the news has offerred almost daily examples of the many failures of the private sector and the free market to operate successfully and with dependability. Many basic services have to be delivered to the public whether the credit markets have adequate liquidity or not. Thirdly, I am very puzzled about where state employees have their paychecks tapped for political purposes.
It would seem that the authors of this article have ventured into an area of which they have very limited insight and knowledge.
1. Should read - as low as possible. Not "lower than what is spent".
2. In other words - tax cuts for the rich. Lets create a larger percentage of people that live below the poverty line for a diminished tax base yet collect less and less from the rich. What the puck are these people thinking? Oh yea, Republicans trying to get the ignorant and fearful to keep believing in failed economic policy.
3. Charge the taxes necessary to cover the "extra" cost of health care for sinners. If the sinners are found to die earlier and the Treasury gets to keep their social security payments, then make adjustments downward. P.S. - Outlaw all smoking in public places.
4. They got this one right. No Dick Cheney "black opt" programs.
5 This one is right on too.
6. Hogwash, we have to choose our future as opposed to putting our head in the sand. Absolute hogwash and the least "helpful" Fiscal Policy suggestion on this list.
7. Create a balanced buget? Won't be done if this article sticks to points 1. and 2. In addition, we can't have a balance budget now. We have to run surpluses for the next 40 years to pay off the debts incurred under the past three Republican administrations. Who are these jokers kidding?
8. What? No 21st century schools. No higher pay to good teachers? Vouchers? What the....?
9. What - keep the same system? Medicaid reform? Bush just tried to do that with a Republican lead congress and succeeded with their bill. Guess what - the bill sucks. Hogwash.
10. This is a weird one. Once the public workers get their paychecks, doesn't that money then become private? Am I wrong to think that they should be able to do whatever the puck they want to do with their money?
This whole thing is just a crock of crap.
Privatization: A Social Milestone or Millstone?
(An abstract of a Doctoral Dissertation)
Herbert B. Siegel, Ph.D. (candidiate)
Dr. Tesfaye Ketsela, Faculty Advisor
Dr. William Vickrey, Mentor
Privatization creates new social orders that eradicate some inequities of existing systems but replaces them with new and greater risks. Because commerce is meant to generate wealth for special interests, governments are mandated to provide essential services to society-at-large. Social homogeneity requires a confluence of these processes to balance commercial interests with social needs, but privatizing changes ownership and public accountability adding nothing of tangible value to society-at-large.
Effective governing includes barriers against onerous accumulations of wealth. For example, monarchies tax wealth by decree and by covenants of Seisen, aristocracies survive by consent of oligarchic classes, and democracies that adopt rules-of-law from older philosophies, are the final arbiters of wealth distribution. Privatizing implies social consents to redistribute public wealth to private owners without due process or public referendums. None of these schemes can work in the long-term, however, because they are political expediencies inflicted on uninformed constituencies, and laws allowing it are enacted by sovereigns to guaranty their self-perpetuation within legal systems (families) that are ontologically structured, in mutually exclusive epistemologies, and regional cultures. Universal legal doctrines are non-existent except for natural mechanisms of power that redistribute wealth, remedy ubiquitous human conflicts, and act as barriers to social upheaval. Privatizing is ethical and legal only with an informed consent of the public or the formality of due process proceedings wherein victims are compensated by the beneficiaries to restore social equilibrium. Otherwise, essential services and public wealth are morphed into commercial monopolies that benefit select classes. Remedies require a unified paradigm to test for proximate injuries under the doctrine of “reasonable-foresight,” to level playing fields by equating compensation to the victims with gains of the beneficiaries thereby humanizing all Privatization processes.
(Complete dissertation pp. 250 available from Amazon, Dissertation.com, or author)