Starving The Beast

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Starving the States

If you want to get a sense of what we have in store for us as a nation if the Republican’s starving the beast strategy works, you need only look at what is happening in some states. Many state governments today are already suffering from the results of this conservative strategy. In large part, this is due to an enormous advantage that anti-government activists have on this level of government: virtually all states are legally required to balance their annual budgets. So when revenues fall or expenses increase, these governments cannot borrow to make up the difference; they must either cut programs or raise taxes. Conservatives have often been successful in blocking tax increases, which has meant that states have had no choice but to reduce spending on social programs.

During the recession that began in 2008, most states cut their social spending – often in disturbing ways. Many of these cuts fell on these states’ most vulnerable residents. Several states cut reimbursements to nursing homes or made it more difficult for the elderly to qualify for nursing home care. Twenty-one states implemented cuts that restricted low-income children’s access to health insurance. Services for the elderly and disabled were cut in 22 states. Educational spending also took big hits, with state aid for K-12 education reduced in 24 states. Funds were also cut for higher education in 32 states, forcing some to raise tuition by more than 10%.20

Clearly, the decline in state revenues caused by the recession played a large role in these budget cuts. But that is not all that was going on. Many states have had ongoing fiscal problems, and in many cases those problems have been caused or exacerbated by conservative forces who have undermined the abilities of states and local governments to raise needed taxes. For example, the foundation for many states’ fiscal problems was laid in the 1990s when state-level anti-government groups waged successful campaigns to reduce taxes. Between 1994 and 2001, under political pressure from conservatives, 44 states passed significant tax cuts. The effects of these cuts were masked at first by the stock market boom that increased the states’ returns on investments in the late 1990s. But now, with the stock market boom long gone, those cuts have come home to roost and are costing the states an estimated $40 billion or more a year in lost revenue – a significant cause of the long-term fiscal difficulties in many states.21

Conservatives have also been successful in several states in installing caps on certain tax rates. In Massachusetts, for example, local property taxes cannot be increased by more than 3.5% a year. In many years, city expenses have risen faster than that rate and tax revenues have not kept up. This has forced many cities to repeatedly cut public school budgets – firing teachers, reducing course offerings, eliminating sports, and increasing class sizes. Cities have also been forced to reduce fire and police staffing and limit essential public services like snow plowing and road repair.

Fourteen states also now require supermajorities for the raising of some taxes – and this has become particularly problematic. Supermajorities require that 60%, 67%, or even 75% of the legislators must agree before taxes can be raised – rather than the simple majority of 50% plus one that applies to other kinds of legislation. This allows an anti-tax minority to block majority rule. In some states, for instance, a majority of citizens in local school districts has often voted to raise taxes to help fund education – but they have been frustrated because they couldn’t marshal the needed two-thirds majority. Statutory requirements like supermajorities and tax caps are the some of the best political weapons used by anti-government forces because they make it all but impossible to raise taxes and this forces state and local governments to cut spending on programs.

Making matters even worse, conservatives are now pushing efforts to establish constitutional caps on state government expenditures – plans that would limit spending growth to the rate of inflation plus population growth. The first state to adopt this approach, Colorado in 1992, saw its public services deteriorate significantly. For example, it dropped from 35th to 49th in K-12 spending as a share of personal income, and from 35th to 48th in higher education funding a as share of personal income.22 In 2005, citizens in Colorado voted to suspend this amendment for five years so that they can restore needed funding to vital services. The disastrous results in Colorado have not stopped anti-government activists from launching campaigns to pass similar amendments in 15 other states.

The Case of California

The severe and ongoing budget problems in California are a good example of the kind of damage that anti-government activists can do on the state level. During the recent recession, the state ran into billions of dollars of deficits and was forced to make draconian cuts in state programs and services. The main problem was not excessive spending but excessive restrictions on the taxing ability of the state, which made it all but impossible for it to raise taxes to deal responsibly with its fiscal crisis.

The problems for California began decades ago when obstacles to tax increases were introduced into the state constitution by an anti-tax campaign. Proposition 13 was passed in 1978 and capped property taxes at ridiculously low levels. Cities and counties were then forced to try to raise other assessments and fees in order to continue to supply basic public services. But anti-tax zealots were then able to pass Proposition 218, which prevented cities from raising those fees without the approval of two-thirds of the voters – usually an impossible barrier to overcome.

This left localities no choice but to go begging to the state government for needed revenues. But Proposition 13 actually worked to restrict this source of funds as well. It mandated that the state could not increase taxes without the approval of two-thirds of both houses of the legislature. This anti-democratic arrangement has allowed a minority of tax-hating lawmakers to frustrate the majority and consistently block any efforts to raise needed revenues.

Faced with these anti-tax restrictions, the state had no choice but to institute a series of very damaging cuts in state services. Severe cuts were made in aid to K-12 school systems. California’s public schools already ranked 34th among the states in per-pupil expenditures and 49th in teacher-student ratio – a disgraceful situation that could only be worsened by new budget cuts. Millions of children have been denied medical coverage. Large cuts have also been made in many other essential programs, including mental health services, mass transit, home health care, food stamps, prisons, and aid to the blind and disabled. State colleges and universities have become more expensive and less accessible.

The Effects of Starvation on Education and Infrastructure

Sometimes the effects of starving the beast are serious, but not immediately obvious. Some vital public sector programs have been reduced so gradually that the effects may not be clear to many in the public. Two examples of this are the effects of funding cuts on higher education and infrastructure development.

In recent years, spending for state higher education institutions has taken a hard hit. States have been cutting budgets for public colleges and universities – which produce three quarters of all degrees in the United States. Teaching positions are being cut, class sizes are spiraling, and needed maintenance is being neglected. Some colleges are now unable to provide students with the required courses they need to finish their degrees. In addition, states have been raising their tuitions and cutting financial aid. A study by the National Center for Public Policy and Higher Education gave the public college and university systems in 43 states a grade of “F” for affordability.23  This means that many low and middle-income students simply cannot afford college anymore – in one year alone a half million were turned away for lack of money.24

Crucial infrastructure spending is also being neglected. A study by the American Society of Civil Engineers found that America’s infrastructure is in terrible shape and blamed low levels of investment by state and federal governments. They estimated that over the next five years it would take at least $2.2 trillion to bring our national infrastructure into an acceptable state.25 Some excerpts from the report:

  • Roads and transit systems are in peril. Thirty-three percent of our roads are in poor or mediocre conditions. Funding at the federal, state and local levels is in danger of drying up and citizens are failing to invest in their communities' futures. The nation is failing to even maintain the substandard conditions we currently have, a dangerous trend that is affecting highway safety, as well as the health of the economy.
  • 27.5% of the nation's bridges (162,000) were structurally deficient or functionally obsolete.
  • The nation's 16,000 waste water systems face enormous needs. Some sewer systems are 100 years old and many treatment facilities are past their recommended life expectancy. Currently, there is a $12 billion annual shortfall in funding for these infrastructure needs.
  • Due to either aging, outdated facilities, severe overcrowding, or new mandated class sizes, 75% of our nation's school buildings remain inadequate to meet the needs of schoolchildren. While school construction spending has increased, the cost to remedy the situation remains more than $127 billion.

A recent report by CNN found that in 2001the United States was ranked 6th in infrastructure in the world by the World Economic Forum. Ten years later we were ranked 23rd and falling. Clearly this failure to invest in our infrastructure is a very serious problem – one that can only be addressed with higher taxes and more spending on the state and federal level. But as was noted earlier, the Republican budget plan for the next decade actually calls for hundreds of billions in cuts for highways, bridges, mass transit and other infrastructure developments.

 

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