Sometimes things just fall into my lap and last night was one case. First was this study from State Budget Solutions which concluded:
Americans are sadly desensitized to the trillions of dollars in debt our states are facing. This report brings the debt closer to home by demonstrating that a newborn arrives already more than $13,000 in debt and that a family of four owes their state government $53,700,” said Bob Williams, President of State Budget Solutions. “It is the individuals and families who will ultimately bear this horrific financial burden if state governments do not get their budgets under control.”
The report is an extension of State Budget Solutions’ third annual State Debt Report, released in August showing that state governments face a crushing debt of more than $4.6 trillion. The analysis of debt per person looks at state debt per capita, per private sector employee, and the percentage of private sector gross state product (GSP). In each of the three categories, Hawaii, New Jersey, and Alaska are among states with the five largest debt figures. At the other end of the spectrum, Nebraska has the lowest total in each of the areas.
The largest per capita debt figure for all 50 states is Alaska, where each person’s share of their state’s debt stands at $31,141. New Jersey, Hawaii, Connecticut, and Illinois make up the top five states with the highest per capita share of the state debt.
Nebraska has the lowest total debt per capita at just $4,249 for each resident. Tennessee, Indiana, Florida, and Idaho round out the lowest five debt levels per capita.
Surprisingly – to me at least – Maryland was only 18th in per capita debt, coming in just a shade above the national average. But a recent vote by the state’s Capital Debt Affordability Committee might bump up Maryland’s ranking, according to fiscally conservative advocates Change Maryland. Larry Hogan, Chairman of Change Maryland, takes it from here:
“The O’Malley Administration proved to everyone that with more revenues, come more spending. In their view, a debt-induced spending binge will somehow create thousands of jobs, the estimates of which are pulled out of thin air. This spending will do nothing for struggling Marylanders looking for work, nor will it improve our state’s dismal record in job creation.”
Noting that Comptroller Peter Franchot was the lone dissenter in the Capital Debt Affordability Committee’s 4 to 1 vote, which raised debt spending to $1.1 billion, Hogan said the split within the Democratic Party’s governing machine shows the arrogance of the current Administration.
“When our top elected official in charge of state revenue collections sounds the alarm about out of control spending, and the snooze button is hit yet again, it shows the current regime just doesn’t get it,” Hogan added.
The most recent 2012 National Governor’s Association report on state budgets shows Maryland’s general fund spending has increased 15.5%, three times the national average, and the highest in the region between fiscal years 2011 and 2013.
Taxes and fees have been raised 24 times since 2007, removing an additional $2.4 billion annually from the state economy.
“We have a spend first, ask questions later approach to governing,” said Hogan. “Far from moving Maryland forward, O’Malley’s record tax hikes, record spending and more debt has thrown us into reverse and put our state in a ditch.”
It’s very interesting to note as well that the lone dissenting vote was Peter Franchot, our Democratic Comptroller who seems to be staking out the most fiscally conservative position (by far) among the leading contenders on the Democratic side for Governor in 2014. He could well be Larry Hogan’s opponent if Hogan chooses to run for and wins the GOP nomination. According to the Maryland Reporter website, the vote continued Franchot’s “long-running but losing battle against what he sees as overspending in the face of a sluggish economic growth.”
But if you add the $4.6 trillion state indebtedness to the $16 trillion (and counting) our federal government finds itself short, we’re now staring at $20 trillion. For every person in the WORLD (not just America, but the whole globe) that’s about $3,000 just for us, not anyone else’s debt. In dozens of countries around the globe the annual income is less than that indebtedness.
Of course, those who argue for adding millions to our state debt couch the argument as one of job creation. But what about future generations? Money spent covering the debt of the past loses a step in the economy – it’s sort of like the old “broken window” theory in that you’re creating a task but not creating more wealth through it. Yes, some bondholder is receiving money but no other production ensues in the transaction. On the other hand, keeping that money in the private sector would have provided an opportunity for general improvement both at the time the bond was sold and when it was redeemed.
Maryland never seems to learn that lesson, though. Instead they just keep chasing their tail through extracting more of a share of our incomes and consumption in order to redistribute it to favored groups and constituencies which can provide them votes. We need to get away from that vicious cycle.
Update: Don’t miss the link from Marc Kilmer in the comments, either.