It's the spending, stupid!

Dear Friend:
this article appeared in the Houston Chronicle this weekend:

Balancing, Act II
How not to deal with our projected $18 billion state budget deficit
HOUSTON CHRONICLE
May 15, 2010, 4:33PM

Houston Mayor Annise Parker isn't the only one struggling to make budget numbers add up.

Texas House Speaker Joe Straus, R-San Antonio, has been handed some discouraging early word about the state budget for the coming biennium. Deficits for the budget could reach $18 billion, says Rep. Jim Pitts, R-Waxahachie, chairman of the House Appropriations Committee.

This isn't exactly unexpected. Preliminary estimates had the deficit pegged at near $11 billion. A revenue shortfall of about $3.5 billion in the current budget cycle evidently helped balloon the deficit estimates for the coming two years.

If you don't recall deficit troubles of this size last time around in Austin, that's because the state's bacon was saved by the Obama administration's stimulus package. For all Gov. Rick Perry's carping about the stimulus, he and others weren't too proud to use those federal funds to buff up the state's budget picture.

As a first response to this news Straus has done the politic thing. The speaker has come out against new taxes while putting most everything else on the table as a solution.

Among other things, he's mentioned placing a moratorium on new programs requiring state money, halting the issuance of new bonds, and imposing four-day workweeks and unpaid furloughs on state workers.

We have a couple of early thoughts to offer the speaker and other state leaders as they ponder the situation.

One is that the state budget must not be balanced on the backs of Texas' poor and uninsured. That would be mean-spirited; it's also false economy. Most programs for these Texans come with generous federal matches that make them a bargain. In any case, failing to insure the uninsured only drives them to emergency rooms, where costs for care spiral. Let's not go there, please.

We would also take off the table those early proposals to legalize casino gambling as a means of balancing the budget . We agree with Gov. Perry that gambling is a bad bargain. Experience shows that casinos degrade the environment. Texans should adopt the Not in My Back Yard approach on casinos.

The good news for voters and taxpayers puzzling over the coming budget crunch is that there's a statewide election between now and the opening of the legislative session next January. Everyone with a vote or a veto in these crucial money decisions is running for office.

The budget deficit will be Topic A in Austin in 2011. Our advice to voters is to do your homework on these issues, then question your candidates for state representative and state senator carefully. And do the same with those running for comptroller, lieutenant governor and governor."

I couldn't agree more - we should set an example for the nation by balancing the Texas budget - So I PLEDGE - I will help to balance the Texas Budget and NOT vote for any tax increases of any kind. Likewise, I will NOT try to balance the budget on the backs of the poor.

Too many times I see politicians saying that we need to first cut police and fire services when we balance the budget - Do they think we are fools? This is a blatant attempt at intimidating the public - "If you don't let us spend, we will cut the first thing that hurts you - your safety". This is disgraceful. I will not do that.

The FIRST thing that should be cut is GOVERNMENT PENSIONS!! It is ludicrous to think that a government pension should be 2x or 3x better than the private sector - who works for whom? Note - I have NO pension at all. I am OK with that, I prefer to have an IRA or 401K. We are NOT GREECE, nor should we emulate them. Start with the end game in mind - Four day work week? NO - how about a 5 day work week and 10% pay cut!! Temporary budget gimmicks will not fix fundamental policy problems. Don't be fooled!

I believe in DYNAMIC SCORING, not STATIC scoring. This is critical to understanding tax policy and economics - google or wikipedia this term! Simply - if you tax something you get less of it, not more. (Reagan proved it.)

Today in the Wall St Journal there is another brilliant article which proves this point - it is called the "HAUSER EFFECT". It states and proves with years of data that the government will NEVER collect more than 20% of GDP in taxes; after that people cheat, so best to stop taxing above this magic threshold number. Ain't gonna happen.

To prove I am capable, I will soon post my results on my other blog - "ConservativeCultureClub.blogspot.com" as to my math efforts to balance the federal budget. I have no power now, but I do have a calculator! It really is simply a matter of math and courage. Oh, former real world business experience doesn't hurt either.