Budget Deficits

The Federal Government will run a very substantial fiscal deficit this year. Absent a complete market meltdown, the deficit can be financed even though the price may be high. That deals with the short term but, in the long term, spending will have to be cut unless taxes rise to unproductive and unsustainable levels.

States, cities, counties and other municipalities are also facing ugly mismatches between spending and revenue. Most of them are prohibited from deficit spending although there are some exceptions - mainly for capital projects and draws from so-called rainy day funds. Since there is a practical limit to the amount that taxes can be raised, spending must be cut.

Almost without exception, however, political cowardice reigns when spending cuts are on the agenda. Instead of making hard decisions about effectiveness and value, Governors and Mayors decree across the board spending cuts. Good programs are cut by as much as those that are useless and irrelevant.

We elect politicians to manage the affairs of government and to spend our money both effectively and in moderation. We also elect them to make hard choices: we must demand that they do so. Nor should we accept Ponzi schemes that involve out of control spending with the bill passed to the next generation.

Brave politicians will receive their due from thoughtful citizens. Even if their political careers end, they will know that they did the right thing. Better yet they will set an example set for national politicians to follow.