March 1, 2011- Austerity Budgets are the Norm in State and Federal Budgets Across the Country: While the Rich Get Richer, Everyone Else Suffers
The race to the bottom has picked up its pace. As state and federal governments face budget deficits, they are cutting critical programs with austerity budgets that will weaken education, health care, essential services and the economy.
Wisconsin is ground zero for the race to the bottom. I will be heading to Wisconsin the end of the week to get a better understanding of the situation and to gauge the anger — has government finally hit the breaking point so people will stand up against the class war being perpetrated against them? I have no doubt that if the people were organized and demanded change, we could see the end of the corporate political duopoly that allows big business interests to dominate government and puts profits ahead of people's needs. Maybe Wisconsin is the sign that the tipping point is here? I certainly hope so because the richest country on earth does not need to be in a race to the bottom. We are in this race down because of choices the government is making for their wealthy campaign contributors.
Take Wisconsin, not too long ago the state was seemingly well run with a budget surplus. The economic collapse, as it did for many states, created a budget deficit as expenditures rose and revenues declined; and now that the meager Obama stimulus is running out, the deficit is here. But, in Wisconsin the current deficit and future economic challenges are being made worse by choices made by the government. The Legislative Fiscal Bureau of Wisconsin, the state's official fiscal budget examiner, explained on January 31, 2011 how the state went from surplus to deficit:
"More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees)."
Essentially, in a special session the governor signed into law two business tax breaks and a tax break for health savings accounts, a conservative approach to health care which primarily benefits the wealthy. This cost the state $117 million and none of these costs were offset by other sources of income. This contributed to a budget already stressed by a bad economy and built significantly reduced revenues into future budgets.