Tuesday, August 31, 2010

If We Re-Invent the Wheel, Can We Use It This Time?

A while ago, I opined that one of the big takeaway policy lessons from the last couple of years was the need for automatic budget stablizers for the states, a mechanism to prevent states from engaging in pro-cyclical budget cuts and/or tax hikes during hard times when their revenues tank and their automatic countercyclical spending kicks in. I did not know that once upon a time that actually happened, sort of.  Stan Collender digs deep into history (1980, that is) and remembers that Congress actually did enact an automatic countercyclical general revenue sharing scheme, but then never funded it.  I did not know that. 

Collender is probably correct that Robert Schiller's call for temporary general revenue sharing right now is probably a non-starter in Congress, but in theory there's no reason that conservatives should oppose a plan like that in the future.  On the other hand, in a world that makes sense, all incumbents of both parties should be rushing to approve money to the states to save the jobs of teachers and cops, preferably with those oversized checks that they can hand over in front of the firehouse or whatever.  And Democrats would have realized that even without GOP support, it's better to bite the bullet on a budget vote so that they could pass state aid through reconciliation.  So I guess I won't try to guess whether an automatic stablizer bill of one sort or another will actually have any support in the future, but, you know, it should.


  1. Automatic stabilizers are beloved of wonks, myself included. Too bad we don't have many wonks in congress.

  2. There's no reason conservatives shouldn't oppose revenue-sharing in the future? Of course there is, at least until 2012 or, perhaps, 2016. They have discovered the joy of sabotage, and in the wreckage their victims are flocking to them. The only future that counts is the one in which a Republican takes the White House, at which point "conservatives" will spend on countercyclical measures and everything else they can think of.

  3. The Issue isn't on the downside of the cycle, it's on the upside. New Jersey for example saw State expenditure grow 68% over the 1998-2008 decade, exactly twice the 34% growth in the State's GDP.


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