May 19, 2013 at 10:11 am
Bad news: We have a surplus
Prosperity is the greatest enemy of fiscal discipline. When fortunes begin to reverse, the urgency to cut spending, find savings and use resources more efficiently wanes.
Both Michigan and the federal government are enjoying revenue windfalls thanks to the recovering economy.
In Lansing, Gov. Rick Snyder finds himself with an unexpected $483 million budget surplus. And predictably, special interests and lawmakers from both parties have $2 billion worth of ideas for spending it.
Some want to use the surprise cash to bolster education funding, with advocates for both K-12 schools and universities playing tug-of-war over which is more worthy.
Others would put the surplus into roads and bridges, perhaps creating some near-term jobs and avoiding a really tough decision about how to provide a dedicated source of revenue to maintain the infrastructure.
There are also advocates for restoring the earned income tax credit for low income workers, which was killed by Snyder in an earlier budget.
Local communities are lobbying for meatier revenue sharing checks.
And what would Snyder do? He likes the roads idea. But overall, the governor is a saver, not a spender. He sees surpluses as an opportunity to fatten the rainy day fund, or to pay down pension obligations, or to incentivize local governments to adopt cost-saving reforms.
Good luck with that. Budget talks are heating up in Lansing, and the pot of dollars will dazzle the eyes of lawmakers, who won't be happy until every dime is spent.
Similarly, federal tax collections leaped 18 percent in April, and now stand at an all-time, non-inflation adjusted high. For the year, revenue is anticipated to grow 15 percent.
The annual budget deficit is pegged at $642 billion — $200 billion less than projected just three months ago, and the first time it will be under $1 trillion since Obama took control.
That's eased the pressure on Congress to address spending. The government won't hit the debt ceiling until at least Labor Day, meaning lawmakers can go most of the summer without playing budget brinksmanship.
Some in Washington are even hinting the much-hyped sequester cuts should be allowed to quietly go away.
With no immediate crisis to deal with, and more optimism about future growth, Congress is less consumed by the deficit. And, of course, nobody is fretting about paying back $17 trillion in debt.
Good times are not conducive to good government. Politicians won't embrace fiscal responsibility unless they have a gun to their heads.
They don't win votes by cutting off the sugar.
Vital debate about restructuring local governments and making Social Security and Medicare sustainable will be postponed once again.
And ideas for ways to "invest" the newfound money will bloom like daisies.
Now that the cash spigot is flowing again, there's little hope the spending torrent will slow.