Craig Steiner, u.s.
Common Sense American Conservatism
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State budgets have taken a beating since the recession began. But guess what their latest problem is? Too much money.
That last sentence is exactly right. Lawmakers must be conservative and resist the urge to increase spending, or even try to "soften the blow" from previous cuts. Because the increased tax revenue will not last.
Because also reported by CNN, on the very same day, is the following:
Growth in the job market weakened in May, surprising economists and spurring them to call a report on private payrolls "shockingly weak," "grim," and even a "hairball."
And just yesterday CNN reported that the housing market is continuing to drop and is now in double-dip territory:
Home prices hit another new low in the first quarter, down 5.1% from a year ago to levels not reached since 2002.
And last week CNN reported that GDP growth is decelerating:
U.S. economic growth remained disappointingly weak the first three months of the year, the government reported Thursday.
And, also today, an important manufacturing index contracted, prompting a sell-off in stocks:
A stock sell-off gained momentum Wednesday morning after a U.S. manufacturing report showed growth slowing down...
So employment is "shockingly weak," home prices continue to drop and break new lows, U.S. economic growth is "disappointingly weak," and a key manufacturing index is also indicating that the economy is slowing down. The economy is simply in rotten shape and is either heading into a double-dip or is already there. And the problem is that states have too much money?
The "problem" isn't that states have too much money. The real problem is that state legislators might be tempted to spend this temporary influx of tax revenue when they need to be preparing for the next phase of the recession. I'm sure states will have to engage in quite a bit more spending cuts before this thing is over.
Let's hope state legislators across the country resist the urge to spend every last nickle that comes in. States will be needing those nickles in the near future.
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