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Republican Economic Policies Are Creating a Downgrade Frenzy In States Across The Country

There is a fairly good reason most Americans do not allow their teenage children to have unrestricted access to the family’s finances or manage the household budget. It is likely the same reason that when parents send their child off to college, they put them on a strict budget with the proviso that when the monthly allowance is exhausted and the collegian need more spending money for books and supplies, they will have to get a part-time job. Many Americans have heard horror stories of new college students gaining access to a credit card and immediately throwing wild parties to impress their friends with no comprehension that without an adequate revenue source they will be unable to pay off their debt. One does not have to be Nobel prize-winning economist Paul Krugman to comprehend that sound financial theory and a healthy economy is predicated on adequate revenue as well as controlling spending.

Republicans typically have a childish, drunken-frat boy approach to economics and budget that prevents them from understanding the simple economic concept that revenue is an integral part of finance and budget. Americans with an iota of memory are aware that over the past few decades, it has been left to Democrats to repair the nation’s economy after Republican administrations run up unsustainable debt due to their opposition to revenue coupled with their childish habit of spending to impress their wealthy friends with tax cuts. Although many Americans are unaware of Republican economic ineptitude, credit rating agencies are not.

This week another Republican-led state, New Jersey, received two more credit downgrades from credit rating agencies S&P and Fitch that bring the total to eight downgrades since Christie took office in 2010. Christie’s economic ineptitude is not an aberration among Republican-led states, and New Jersey joins Kansas and Michigan as the latest states to attract attention of credit agencies. Standard and Poor’s downgrade followed closely on the heels of Fitch’s downgrade last week and in a statement explaining the action, S&P directly cited a common complaint against Republican-led states; “major revenue shortfalls” directly related to Christie’s refusal to fund the state’s public worker pension fund according to the law.

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S&P explained their downgrade by noting that under Christie, “New Jersey continues to struggle with structural imbalance and the governor’s decision to reduce pension contributions in fiscal 2014 and 2015 highlights the fact that the state lacks the revenues to comply with its own agreed-on contribution to the pension system. In our view, the governor’s decision to delay pension funding has significant negative implications for the state’s liability profile.” Democrats, like Fitch and S&P, had already taken note of Christie’s economic malfeasance and said his administration was a “national embarrassment.” Democratic National Committee press secretary Michael Czin said, “From his failed economic record to his administration’s gross misconduct during Bridgegate, Chris Christie has failed his state time and again, and now, it doesn’t even look like he’s trying anymore. Instead of working with Democrats to solve the state’s long-term problems, Christie’s busy campaigning for Republicans who apparently want to emulate his failed leadership.” Republicans are not emulating Christie’s economic failures, they are simply following the long-standing conservative policy that revenue is of Satan the Devil and has no place in Republican economic policy at the state or federal level.

As has been reported here, another Republican-led state, Kansas, has suffered credit downgrades credit rating agencies has cited is due to devastating revenue shortfalls as a result of giving inordinately large tax cuts to the rich. This is after Governor Sam Brownback inherited a budget surplus he promptly squandered on tax cuts for the wealthy and corporations that were supplemented with an extra billion dollars Brownback promised would result in a job creation bonanza. Kansas trails the entire nation in job creation.

In Michigan, Republican Governor Rick Snyder’s so-called corporate business acumen has the state’s finances in trouble. In June, Standard and Poors and Fitch both downgraded Michigan’s credit outlook due to” softening in projected fiscal 2014 revenues, expected slow economic growth, and a decline in general fund revenues. S&P cited, like they did in Kansas and New Jersey, the lack of state contributions to distressed localities, pension obligations, as well as school districts due to revenue shortfalls. There was, as usual, plenty of revenue available for tax cuts for the rich and corporations though, like in Kansas and New Jersey.

Although he is long gone, while governor of California, Republican Arnold Schwarzenegger presided over several severe downgrades due to revenue shortfalls and out-of-control debt to fund tax cuts for the rich. In seven years, the debt tripled while schools, services, and roads went unattended that left a Democrat with a proper economic crisis to repair. Within a couple of years, a taxpayer-approved, and a miniscule tax increase coupled with new environmental regulations has the state economy in the black, the debt is being paid down, schools and roads being funded, and California leading the nation in jobs created and economic prosperity.

It is worth noting that in 2011 America’s stellar credit was downgraded for the first time in its history, and ratings agency S&P specifically cited Republican political intransigence and refusal to end the Bush-era tax cuts for the rich starving the nation of much-needed revenue. Throughout the fight to end Republicans’ largesse to the wealthy and continuing to the present, Republicans claim the country does not need more revenue, it needs to cut services, government, and let the nation’s infrastructure completely deteriorate because “America is broke.” However, the country is never too broke to give more tax cuts to the rich. In fact, Republicans are so vehemently opposed to revenue to fund America they fight tooth and nail to allow corporations and the wealthy keep their trillions offshore because according to conservative ideology; if the federal or state governments have adequate revenue they will spend it on infrastructure, education, disaster relief, job creation measures, and research and development.

The pattern is unmistakable; Republicans are ill-prepared to manage finances or an economy whether it is at the state or federal level and the reason is always the same; they oppose any measure to bring in any sources of revenue. According to their economic approach to finance and budget, any revenue or surplus from cutting government rightfully belongs to the rich and corporations they claim will increase revenue and create an economic Utopia. Despite their over-thirty year experiment in economic malfeasance, and Republican state after Republican state suffering economic woes, they are Hell-bent on continuing what they claim is running government like a business that will eventually go bankrupt so they can sell it off to their wealthy donors at a discount and watch them promptly drown it in a bathtub.

 

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