Several recently released reports indicate that a number of states have improved their financial and budgetary positions, even while the national picture remains depressed.
America’s nationwide economy continues to languish in the economic doldrums, with high unemployment and even worse long term unemployment, weak manufacturing, poor export numbers, and other worrisome indicators.
(New York Analysis, Feb. 4) Indeed, with both an unprecedented national debt and ruinous annual deficits, there are few reasons for optimism in the U.S. picture. This contrasts with the news from a number of states, although even within those states reporting progress, challenges remain.
Much of this state-by-state progress may be attributable to adherence to economic perspectives markedly different than that of the White House, according to the National Governors Association.
“A number of governors discussed good government as a way of helping their state’s economy. Limiting regulations or streamlining the regulatory process was mentioned in 22 speeches…”
United States Supreme Court Justice Louis Dembitz Brandeis famously wrote “It is one of the happy accidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory, and try novel social and economic experiments without risk to the rest of the country.”
The diversity among state governments celebrated by Justice Brandeis, and the growing tendency to adopt policies significantly different than Washington’s was recently noted by the American Legislative Exchange Council’s (ALEC) “Rich States, Poor States” report:
“With Congress locked in perpetual gridlock and the U.S. economy stuck in a lackluster recovery, state governments around the country are seeking their own solutions to the country’s economic woes. However, the paths that states are pursuing to achieve economic prosperity are not all the same. Some have seen magnificent success in achieving real economic recovery while others continue to struggle.”
The National Governors Association reports:
“Most governors reported balanced budgets, without reporting nearly as much of a need for large budget cuts or new revenues as they had in the past few years. Twenty-Four governors reported having a surplus or building up rainy day and revenue funds. Thirteen governors also pointed to their state’s good credit rating.
“However, many governors also were wary of potential federal budget reductions and forecasts suggesting economic growth will continue to be slow for most of the country…Twenty-one governors mentioned that funding pensions and other long-term employee benefits were a challenge for their state, though some governors who talked about pensions simply reviewed benefit changes implemented in the past couple of years…
“The states are also operating with a smaller workforce than was in place when the recession started–13 governors mentioned staff reductions, totaling in the tens of thousands. In most cases, governors reported these numbers as evidence of their success at rightsizing government…”
The public has noticed the contrasts between state governments and Washington. According to the Pew Research Center,
“Even as public views of the federal government in Washington have fallen to another new low, the public continues to see their state and local governments in a favorable light. Overall, 63% say they have a favorable opinion of their local government, virtually unchanged over recent years. And 57% express a favorable view of their state government – a five-point uptick from last year. By contrast, just 28% rate the federal government in Washington favorably. That is down five points from a year ago and the lowest percentage ever in a Pew Research Center survey.
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“The percentage of Democrats expressing a favorable opinion of the federal government has declined 10 points in the past year, from 51% to 41%. For the first time since Barack Obama became president, more Democrats say they have an unfavorable view of the federal government in Washington than a favorable view (51% unfavorable vs. 41% favorable). Favorable opinions of the federal government among Republicans, already quite low in 2012 (20% favorable), have fallen even further, to 13% currently.
“The national survey by the Pew Research Center, conducted March 13-17 among 1,501 adults, finds positive ratings across party lines for state and local governments overall. But the partisan makeup of the state government matters: Republicans give more positive ratings to GOP-led state governments, while Democrats rate Democratic-led state governments more highly.
“Notably, politically divided state governments get positive ratings from members of both parties. In the 13 states with divided governments – those in which the governor and a majority of state legislators are from different parties – majorities of both Republicans and Democrats express favorable opinions of their state governments.
“A sizable majority of Americans (69%) say that their state is currently facing budget problems. However, assessments of state budgets were even more negative two years ago; in February 2011, 81% said their state was encountering budget problems. And while just 30% say that economic conditions in their state are excellent or good, that is nearly double the percentage expressing a positive view of the national economy (16% excellent or good).”
There are sharp distinctions between the states. Many Republican-oriented states have cut costs, regulation, and taxes. On the other hand, Democrat-controlled states, according to the Wall Street Journal, including examples such as Minnesota, Massachusetts, Colorado, and Maryland, have hiked taxes.
Referring to those states, the Journal notes that:
“The measures contrast starkly with initiatives to cut or eliminate taxes on individual and corporate incomes that have dominated the discussion in much of the country, thanks to Republican control of nearly half the statehouses.
The “Rich States, Poor States” study notes that governors of the five states with the worst economic outlooks, including Vermont, New York, Illinois, California and Minnesota, are all Democrats.
Some of those comparing the inability of the leftist policies of the national government and state governments with views similar to the Obama Administration to make progress note that the more conservative policies of some state governments have proven more effective. An American Spectator article notes:
“…there are oases of rationalism found in the 25 states now governed under total Republican control, with a Republican governor, state senate, and state house. America is conducting a national experiment on capitalism versus socialism among these increasingly partisan states. Compare the fiscal and economic performance, for example, of Democrat-controlled California, Illinois, and New York, to that of Republican-controlled Texas, Florida, and Virginia, not to mention Indiana and Wisconsin.”
Washington may not be taking note. Authors David Lowery, Virginia Gray, and Frank Baumgartner note in a Publius article that:
“We find little evidence that changes in state policy agendas in the aggregate influence national patterns of policy attention…while federal funding and regulatory activity ensure that the national government can exercise influence over policy making in the states the obverse is not nearly so clear…Our results also indicate that…both national and state legislators would respond to common problems at the same time-may not be valid. To a considerable degree, state and national legislatures still have their own policy agendas and their own policy cycles.”
As the national economy continues to lag, Washington may soon have to take note of what has, and what has not, worked in the individual states.