So Gov. Henry McMaster is of the opinion that our economy here in South Carolina is going well. I believe his actual phrasing was, “South Carolina is red hot.” Honestly, I don’t disagree with him. Where I do disagree, however, is in some of his decisions based on being ‘red hot’.
This is the sort of mantra we’ve heard before. Spending increases and tax rebates combined with tax cuts masquerading as fiscal responsibility. Call me old fashioned, but my form of fiscal discipline – the kind drilled into me by my deep South father in my formative years – maintains that one shouldn’t count on wishes and hopes for paying the bills.
Cutting taxes is good. But cutting taxes because things are going well and you want to do it while you can while also raising spending? That’s recipe for disaster.
I was living in Virginia during Bush’s second term. Northern Virginia had the dotcom growth as well as federal employment and there was a strong commitment, both on a state level and on a federal level, to using the surplus to make things better for people.
More spending, a tax rebate and other items of largesse. So we went into the second George W. Bush’s term with economic expansion and high hopes.
Then came 2008 and the economic collapse. Suddenly, we were running massive deficits based on tax cuts that assumed the good times would last forever.
Instead, during the first 10 years of the tax cuts added $1.5 trillion to the national debt and the Congressional Budget Office projected that between 2011-2019 – where we are now – added another $3 trillion to the national deficit.
So by throwing fiscal discipline to the wind we added $4.5 trillion to the national debt. At an approximate interest rate of 3.1 percent — the rate as I write this and a good one, I admit — that means just those optimistic tax cuts are costing you and me, the taxpayers, $139.5 billion per year.
Let that one roll around in your head for a minute: $140 billion just to pay for those cuts.
We could build 28 walls for that kind of money.
We could pay the entire budgets of the Departments of Transportation, Housing and Urban Development, State and Agriculture for that much money.
Instead we spend that money as well as pay interest on money spent 20 years ago through tax cuts in good times.
I’m not saying we shouldn’t keep taxes low. But I’ve seen this before.
If the state – through the Governor’s new priorities – commits to something and things end up not going as he seems to believe – if ‘red hot’ goes down to ‘cool’ or even just ‘lukewarm’ we’ll all be paying for it.
Whether it’s through suddenly lacking road money or safety services, we’ll be paying for it. Because it’s the counties and the citizens who will be left standing when the music stops.
Fiscal conservatism – REAL fiscal conservatism – isn’t something as simple as keeping taxes low. It’s not if it means keeping spending high.
True fiscal conservatism should be figuring out what your priorities are, doing the math to figure out what they’ll cost and then taxing at that rate – or a bit above to account for the unknown – and moving forward.
I fear we’re not on that path. Good times don’t last forever.
All of us who’ve been through 2008 know that. But I think our leaders have become spoiled by ten or more years of uninterrupted growth.
It would be a far better approach to the process to work backwards and plan for the future rather than writing those checks now figuring someone else will have to pay for it.
That’s a budgeting system many, many governments have used in the past. But it’s not fiscally conservative. Not remotely.
I can only hope our state and county leaders can see that before they’re again forced to budget in a crisis instead of in good times.
Because I like South Carolina and I like the Charleston area and I don’t want to see us stuck paying to clean up someone’s poorly planned mess in 10 years. We’ve done that before.