Where does the CT budget crisis come from? (II) : 20th century spending in a new economy

Last week we gave a brief overview of the fiscal challenges that Connecticut is facing, with a focus on the revenue side. We concluded that although Connecticut is not really a high-tax, big spending state if we take into account its wealth, we do raise revenue in very ineffective, outdated ways. The state has a sales tax riddled with loopholes, an income tax that leaves a lot of income untaxed, business taxes that penalize the service economy, and a property tax that steers development out of urban areas while undertaxing wealth. If we want to get Connecticut out of the current state of endless fiscal crisis, tax reform is both necessary and long overdue.

Of course, revenue is only half of the equation when talking about the budget – spending also plays an equal part. As with revenue, Connecticut has some spending practices that are both inefficient and outdated, creating a state and local government structure that is often not up to current challenges. In many areas, we just spend money in a lousy way. Continue reading

Voters like abstract budget cuts, but support real spending

One thing that political scientists have known for awhile is that voters say that they prefer spending cuts to tax hikes on the abstract, but they are against cutting any specific social program when given a choice.

The Pew research center published a poll last month with a list of Federal spending programs, from entitlements to foreign aid, asking if funding should be reduced, sustained or increase in each of them. Here are the results:

pew-poll-spending

 

Not a single Federal program (not even foreign aid) has a majority of voters asking for cuts over increase or maintain funding. Not one. In most cases a plurality of voters want to keep spending at the same level as it is today, closely trailed by the group that wants to spend more. Even in the three programs were budget-cutting did not come last they could only muster 48, 34 and 32% support.

These numbers explain, incidentally, why the policy debates on the budget are so frustrating. Fiscal conservatives are quick to demand budget cuts, but they are always very reluctant to name what policies and programs they want to pull money from. Liberals, on the other hand, tend to avoid saying that they want higher revenue and more spending on the abstract, but will offer a shopping list of stuff it is worth funding in a heart beat. In the last election we had the Republican running on a platform of cutting spending while blasting the President for cutting Medicare; you do not get more confusing than that. No wonder voters give contradictory answers when polled. Politicians have not been really clear on what their ideas are either.

In any case, the numbers above should serve as an important reminder: voters do like the programs we advocate for. It is a matter of making sure they understand what budget cuts entail; on the rest they are already on our side.