If you want proof that the federal government has lost its way on fiscal leadership, then look no further than the spending cuts being made by individual states.
The message is clear that if states want to be fiscally sound they no longer can look to the federal government for help.
Long before anyone in the Obama administration recognizes the folly of out-of-control spending, state governors are taking the lead and making the painful cuts that the federal government should have been making instead of racking up this year a whopping $1.4 trillion deficit.
Perhaps most telling is that state legislators recognize that levying more taxes will not fix the economy. While the Obama administration is poised to raise taxes on small businesses (where 75 percent of new jobs are created) they are contributing to an environment of job-killing uncertainty. Most governors, on the other hand, are cutting taxes to spur business growth and the accompanying job growth.
If states can figure this out, why can’t the Obama administration?
In Florida, newly elected Republican Gov. Rick Scott is proposing budget cuts of $5 billion while also taking on public-employee pensions, which shackles the state to payouts that rob it of investing in job creation.
Wisconsin is restructuring its dealings with its State Employees Union. Iowa is cutting its corporate income tax rate by 50 percent, and in some states, Medicaid payments are being reduced.
Arizona Republican Gov. Jan Brewer wants to institute a waiver to eliminate Medicaid coverage for 280,000 residents, which in its first year would save about $1 billion.
In essence, governors have gotten the message that they need to reshape the way they do business. They didn’t get smarter. They just got frustrated that they were moving in the wrong direction and the role model for a turnaround wasn’t in Washington. They heard from their constituents and responded with change – not the kind of change promised by the Obama administration that has put the country in economic peril.
Not all governors are getting the message. In California, which faces a $25.4 billion deficit, newly elected Democratic Gov. Jerry Brown while vowing to reduce spending on one hand, on the other hand is asking voters to extend temporary increases in the state income and sales taxes.
Now here’s a bit of irony to consider. Illinois, President Barack Obama’s home state, is one of a handful of states that is actually raising taxes. Illinois Governor Pat Quinn announced a 67 percent increase in the state's individual income tax rate and a 45 percent jump in its corporate rate. The resulting firestorm is already evident. Neighboring states are luring Illinois companies to relocate to save millions of dollars in taxes. Can you imagine what impact this is going to have on employment and business growth?
In his most recent State of the Union address, President Obama talked about shared responsibility and instituting a five-year freeze on all discretionary government spending outside of national security. If this sounds familiar, it reads very much like last year’s State of the Union.
Is it any wonder that the most promising Republican presidential candidates for 2012 are governors or former governors? As you look around the country there are some great governors that could hold the highest office.
I’m thinking of candidates like former Massachusetts Gov. Mitt Romney, Mississippi Gov. Haley Barbour, Indiana Gov. Mitch Daniels and New Jersey Gov. Chris Christie.
There’s a reason. They have shown the kind of spending constraint that creates an alternative to the spend-and-tax philosophy of the Obama administration.
The smart politicians these days appear to be the nation’s governors.
Instead of meeting with his cabinet, perhaps President Obama can invite a few governors to the White House to show him how it is done in the states.
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