The Fiscal Future Looks Grim for State and Local Governments
Article from For Liberty by Norm Leahy.
We all know the federal government has a spending problem. With every trillion dollars added to the $23 trillion national debt (you can watch it grow in real-time here), our children and grandchildren are made a little bit poorer, and a lot less secure.
But as the Government Accountability Office notes, Uncle Sam isn’t the only one struggling with spending. State and local governments are having more difficulty paying their own bills. And that problem is only going to get worse. What’s behind it?
GAO’s simulations suggest that growth in the sector’s overall expenditures is largely driven by health care, with states’ share of Medicaid spending as the primary driver. These expenditures are projected to grow more than GDP each year. Employee compensation, the largest share of operating expenditures, decreases as a share of GDP during the simulation period. Health benefits are the only component of employee compensation that increases as a percentage of GDP.
Galloping health care costs, plus other factors like state and local government pensions, wages, and more, all point to potential problems in the long term…unless changes are made now.
Of course, efforts aimed at convincing government of the need to curb, restrain, or reform spending is usually met with indifference, or worse.
The bills will – inevitably – come due. We can either change course now, and make the repayment more manageable, or allow the political class to keep on spending in our name, consequences be damned.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons