Economist: States More Fiscally Sound Than Feds

Monday, 28 Jul 2014 06:57 PM

By Courtney Coren

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Wisconsin Rep. Paul Ryan's plan to reform safety net programs partly would work by giving more power to states to spend the money instead of the federal government, and economist Matthew Mitchell says states are generally more "fiscally competent" than the federal government.

"The states actually have a stronger fiscal record than the federal government does," Mitchell told Ed Berliner on "MidPoint" on Newsmax TV on Monday.

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"Forty-nine out of 50 states have balanced-budget requirements, and most of them meet this," he explained. "Some of them play some games with their budgets, but they've got stronger records as far as that goes."

The senior fellow at the Mercatus Institute at George Mason University said that one of the factors that makes states stronger is "that they're competing with one another."

In addition, "states have tended not to take on as many unfunded liabilities as the federal government has."

"The states typically seem more competent actually in fiscal matters than the federal government," he added.

Mitchell said that Ryan will likely "meet a ton of political resistance" from "special interests" and the "agencies themselves" that run the different programs, which will resist having to "change they way they do business."

The George Mason University fellow said that "this is an idea that economists have talked about for a while . . . if you set up an opportunity for states to compete and develop their own sorts of anti-poverty programs, then you don't get locked into any vision programs — the programs that aren't achieving what you're aiming to achieve."

"One thing that economists have talked about for a while going back to Milton Friedman is the idea of taking all these programs and just turning them into one simple cash transfer," he explained.

"Rather than force people to buy particular products . . . it's actually much more efficient to just give people a cash transfer," which is also much "more transparent," he added.

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