Interview with Sara Burrows
Did an interview yesterday, sitting in my beach chair under my umbrella, taking a break from reading, and talking to the lovely Sara Burrows.
And here today it is published on-line for the world to see. I think this whole internet thing is going to catch on.
States have to maintain balanced budgets, according to their constitutions, while the federal government can run a deficit for as long as it likes. So when states spend too much they have no choice but to raise taxes or ask for federal funding, Munger explained. Since raising taxes is not popular, federal bailouts offer state politicians an escape from being held accountable.
But federal bailouts lead to federal deficits, Munger said, and deficits are nothing more than future federal taxes.
“There’s this fiction that there are two different taxpayers — the state taxpayer and the federal taxpayer. There are not. We’re all both,” Munger said.
People who think they are receiving some sort of gift from the federal government are being deceived, he added. All they are incurring is a different form of taxation.
If voters really thought it was worth spending an average of $1 billion more per state than they are taking in to rescue teachers, police, and firefighters, they would agree to an immediate increase in state taxes in a referendum. State elected officials know higher taxes are not popular, so they use a roundabout method to secure the funds.