Time to Debate the Role of State Government: Are we driving a Cadillac when a Ford would do?

Member Group : Lincoln Institute

White House Chief of Staff Rahm Emanuel famously said that "you never want a serious crisis to go to waste." That philosophy could easily be adapted to Pennsylvania’s current budget impasse. Perhaps the crisis should not be looked at as a problem so much as it is an opportunity.

It is an opportunity to have a much overdue debate over the role, size and scope of government in Penn’s woods. With the lone exception of the Thornburgh Administration, state government has grown dramatically in recent decades. This unchecked growth in size and spending has been made possible by a job crushing tax hike passed in 1991 and increased revenue due to the expansion of the national economy.

With the national economy now in the throes of recession, revenue has lagged behind projections and the spending spree has become unsustainable. Politically this is a problem because the governor and the legislature have become accustomed to handing out ever increasing quantities of state dollars and the citizenry has become accustomed to accepting it.

The recession has forced a hard new reality upon Harrisburg: either trim the spending or raise taxes significantly. Republican legislative leaders have rallied to the trim spending option, while Governor Ed Rendell and most Democrats are willing to take more money from the pockets of working families and small business so that they can continue dolling out the dollars.

All of this raises the question as to whether we can or should continue to fund all the programs currently funded, and should we continue to fund them at the same or increased levels? The answer to the first part of that question is that we cannot continue at the current pace, at least not without implementing some or all of the wide range of tax hikes proposed by the governor.

As for the should, that is the debate the current budget crisis has given us the opportunity to have. State spending, particularly on education and welfare, has been on a sharp upward trajectory for years. The Rendell Administration has also borrowed heavily to essentially try and bribe businesses to locate and or expand in Pennsylvania, with little to show for the expense. Clearly there are many areas where cuts must be considered.

Public education in particular has been a sacred cow. Proponents of endless funding increases use the specious emotional argument that it is "for the children." I say specious because no link has been established between the spending of more money and educational achievement. In fact, since fiscal year 2002-2003 state spending on basic (K-12) education has increased 37.6%.
While the state obviously has a constitutional requirement to provide public education, the constitution is silent as to the amount and scope of that funding. The fact is we are paying for a Cadillac education system when a simple Ford would due. And worse, our Cadillac system is performing so bad it would qualify for the Cash for Clunkers program (were that program not out of money).

Welfare spending is another area that has skyrocketed out of control. It has gone up 63% under the current administration alone. While it may seem cruel to suggest cuts in welfare during a recession, the fact is we can no longer continue to increase funding at the current pace. After flirting with significant reform in the 1990s, Pennsylvania’s welfare system has reverted back to encouraging dependency rather than independence.

The state’s system of funneling money to politically connected businesses and corporations has also been a bust. In fact, polling shows most business leaders in the state don’t even support the "who you know" style of corporate welfare practiced by the Rendell Administration. The time has come to stop wasting dollars on programs that produce, at best, few and temporary jobs.

Yes, there is opportunity in this crisis. Now that a stopgap budget has been passed allowing the state to pay its employees and vendors time should be taken to not just look at proposed spending increases, but to reassess whether we can afford to keep doing all the things we are doing. We must come to grips with the need to limit the size, scope and expense of state government. California faced a much bigger budget deficit and did just that; Pennsylvania should do the same.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected])

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