Published in the Union Leader (opinion section not available online) and Foster’s
Wednesday, March 10, 2010
Sen. Kathleen Sgambati, in a February commentary disputed the notion that “we do not have a revenue problem, we have a spending problem.” She pointed to a troubled economy as a reason that we need to spend more, not less. I think she has this completely backward, and I firmly believe that this question will be the central issue of the 2010 election across this nation, and in New Hampshire. We must reduce spending, borrowing, and taxation if we want to put our economy back on track to prosperity.
The evidence from Washington on this issue is clear. Hundreds of billions of dollars of so-called “stimulus” spending failed to prevent unemployment from rising above 8%, as claimed. It has temporarily propped up our gross domestic product (GDP) by expanding the government sector of the economy, but has done so at the expense of draining resources from the private sector. This spending has put our families into greater debt at a time when we need to save, and has weakened our dollar. As a result of our reckless spending China is beginning to unload its treasuries, understanding the credit risk that we have become. Greece is facing a default and potential expulsion from the European Union for having a deficit to GDP ratio of 12.7%, yet we are not far behind at 12%!
The evidence from history is also quite clear. Prior to the Great Depression, recessions or depressions were generally short lived [--] a year or two long. However, FDR’s numerous attempts to spend our way out of the Great Depression through make-works programs simply prolonged the agony, stretching the depression to over a decade [--] the worst in modern history. Japan also experimented with borrowing their way out of their economic crash in the 1990s, by propping up companies “too big to fail”, resulting in Japan’s Lost Decade of economic stagnation.
Currently, the federal government spends around $12,000 per person. New Hampshire spends around another $8,000 (see www.usgovernmentspending.com). So for a family of four, the government is spending $80,000 on their behalf! Around 40% of our GDP is spent on government (Federal, State, and Local). Does Sen Sgambati seriously think we are not spending enough? As our economy contracts, our GDP and our wages are declining, yet the recent administrations in Concord and in D.C. have continued to increase spending. This is leading to a tax burden that is becoming a larger and larger percentage of our incomes. It should not be a surprise that unemployment is on the rise with such a heavy burden placed on our economy.
At the state level, spending has increased over 20% during Sen Sgambati’s tenure. Overly optimistic revenue projections have put the State in a spot where hundreds of millions of dollars of cuts are needed simply to balance the budget. This fiscal irresponsibility has caused the Legislature to consider and quickly approve without discussion or debate measures such as the “LLC tax”, which is certain to kill jobs.
If we want our economy to thrive, and for jobs to return to the U.S. and to New Hampshire, we must cut spending and taxation. Spending IS the problem, not revenue. We must eliminate the LLC tax and campground tax; reduce the business profits tax and meals and rooms taxes. Given the cuts needed just to fill the current deficit, this is going to take new ideas and new leadership – clearly Sen Sgambati has neither.
Jim Forsythe
Strafford
Candidate
State Senate District 4
Contribute
Volunteer
