MuniLand

Republican fiscal conservatism is a myth

By Cate Long
December 1, 2011

Government has expanded tremendously at every level in the United States over the last several decades. Expenditures have risen; constituencies have gained new subsidies; and loads of debt has been taken on. It’s unstable and it’s time to go on a diet.

The Republican party declares that they are the party of fiscal conservatism which has been beating back the profligate Democrat party. Here is the war cry from their 2008 party platform:

The other party wants more government control over people’s lives and earnings; Republicans do not.  The other party wants to continue pork barrel politics; we are disgusted by it, no matter who practices it.  The other party wants to ignore fiscal problems while squandering billions on ineffective programs; we are determined to end that waste.  The entrenched culture of official Washington -– an intrusive tax-and-spend liberalism -– remains a formidable foe, but we will confront and ultimately defeat it.

I wondered if the Republicans’ charge was accurate or if both parties had a tendency to spend tax dollars to buy support. Was there any quantitative evidence that Republicans were running tight fiscal ships? Looking at the finances of the states might create a better understanding. All states except Vermont must end the year with a balanced budget. Many of them require reserves in the form of rainy day funds. I pulled data from the National Association of State Budget Officers Fiscal Survey of the States, Fall 2011 covering “Total Balances and Balances as a Percentage of Expenditures, Fiscal 2010 to Fiscal 2012″. This is basically what states have left over at the end of the fiscal year. What I found is that both parties can practice sound fiscal policies or run very close to the edge of fiscal catastrophe. Republicans have no lock on tight fiscal ships.

The top chart shows that three of the ten states with the highest year-end budget surpluses and rainy day funds were controlled by Democrats and seven were controlled by Republicans. The four states with the biggest year-end balances are energy-producing states, led by Alaska. The guaranteed energy revenues that these four states enjoy would likely lead to big surpluses regardless of which party ran the state.

The chart below shows the ten states with the weakest year-end fiscal position. Six of the ten were controlled by Republicans. This data shows that a state can be Republican-controlled and still skirt the edge of the economic precipice.

The nation has really big fiscal problems to face; rhetoric and myths will not solve our problems. We need government but it needs to be run wisely and efficiently. Both parties seem to have been fiscally imprudent. There is likely to be myths about the Democrat party, too. Let’s find them and debunk and get on to rebuilding our nation.

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