12.01.2008 0

The Ant and the Grasshopper

  • On: 12/18/2008 10:17:58
  • In: Taxes
  • By Isaac MacMillen

    The ants were spending a fine winter’s day drying grain collected in the summertime. A Grasshopper, perishing with famine, passed by and earnestly begged for a little food. The Ants inquired of him, ‘Why did you not treasure up food during the summer?’ He replied, ‘I had not leisure enough. I passed the days in singing.’ They then said in derision: ‘If you were foolish enough to sing all the summer, you must dance supperless to bed in the winter.‘ – The Ant and the Grasshopper (Aesop)

    Most Americans are familiar with the above fable. Children understand it easily—those who fail to work now will suffer the consequences later. Yet, to many, if not most, politicians, however, the moral of the fable is completely lost. States that have had profligate spending problems in the past are now at a loss as to how to deal with the current economic crisis. Take New York, for example.

    Historically, the state has a reputation for out-of-control spending—regardless of party. (In 2007, the NY Conservative Party leader favored the liberal Democratic governor’s budget because it was less fiscally irresponsible than the Republican Senate’s budget.)

    But a new low was reached this week when Governor David Patterson shocked the state by proposing a new budget which, while attempting to cover its present $15.4 billion deficit (which, grasshopper-like, it failed to deal with beforehand), would increase taxes by (a projected) $4.6 billion annually while the budget size would see a 1% increase. This comes at a time when New York acknowledges that revenues from personal income tax, corporate income tax, and sales tax have declined as the economy suffers a long-predicted downturn.

    Though many would remind taxpayers that this increase is far less than previous years (6.3% last year, 10% the year before), the fact remains that, when revenues go down, the budget size must be cut. Individual spending cuts are not enough if they fail to shrink the budget. And raising taxes on those already hit by a deepening recession certainly not the answer. Yet the budget proposal would create or raise 137 taxes (and “fees”), including cable TV, movie tickets, haircuts, massages, non-diet soda—even internet music downloads would now face a 4% tax.

    Desperate times call for desperate measures, it’s true. But to impose taxes on an already cash-strapped populace is simply egregious. New York’s refusal to act as the situation demands and cut back on its profligate spending has made it akin to Aesop’s grasshopper.

    New York is not alone in its budget woes, however. Over half (29, to be exact) of the 50 states had deficits for 2008-2009. And as many as 43 are projected to have budget gaps in the next year or two. For this coming year, California took first place ($22 billion deficit), New York was second ($4.9 billion), followed by Florida at $3.4 billion. Conspicuously absent was Texas, the second most populous state. In fact, Texas is also one of the seven states for which a budget deficit is not projected up through 2010.

    Its secret? When faced with a $10 billion deficit just five years ago, the state responded by cutting taxes, cutting spending, and tackling the tort reform issue. That, combined with Texas’ sound pro-business policy has helped it weather the economic storm. Hundreds of thousands of jobs were created there last year. And now, it is taking precautions by looking to the future and preparing to cut discretionary spending. Like the ant, it is storing up for winter.

    Perhaps New York and other deficit-heavy states should take some cues from Texas. Instead of raising taxes and increasing spending, perhaps it should cut taxes and decrease spending. Then, perhaps, they it will be able to escape the frozen wasteland to which their summer leisure has condemned them. Otherwise, the clueless politicos can dance supper-less to their empty beds.

    Isaac MacMillen is a contributing editor of ALG News Bureau.

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