I listened to Governor Tim Pawlenty today as he announced his specific proposals for unallotting government funded programs like aid to cities and counties and money for healthcare funding for the poor. The Republican governor and the Democratic-controlled legislature were unable to agree on a way to balance the budget for the next 2 years. The Dems proposed raising taxes and the Governor vetoed their bills. Therefore, a MN statute allows the governor to unilaterally balance the budget by de-funding programs.
The Governor said repeatedly in his talk that just as Minnesota families were tightening their budgets in the face of the recession, so the government should do the same.
This kind of thinking sounds perfectly reasonable but is totally wrong. Imagine if the federal government took that approach. Our deep recession would quickly turn into another great depression. Now is precisely the time when the government needs to step up spending to employ more people and keep the economy from going into a free-fall.
The states cannot fund their budgets with deficit spending like the federal government can, but they can raise taxes to maintain services. Minnesota DFLers (our particular version of Dems) proposed a slight tax increase on the wealthiest Minnesotans along with some small budget cuts in order to balance the budget. The governor, who is now essentially running for President, wouldn't hear of it.
Instead, funding to colleges, hospitals, cities and counties will be cut. People will lose their jobs, thus deepening the state's financial difficulties. State budget belt-tightening in a recession sounds so reasonable but is totally counter-productive.