'Minnesota Solution' for America? No...

Minnesota recently had a government shutdown over its budget and finally the Democrat governor Mark Dayton acceded to fixing the problem after surrendering his position on tax increases. In other words, there aren’t going to be any tax increases because Republicans in the state legislature held firm. It made national headlines. Big win for Republicans!

Sound familiar? Like a script for the Washington deadlock, perhaps? Well, possibly… But there’s much more to this story than meets the eye.

AP reported about Minnesota:

‘The deal to erase a $5 billion deficit came after a big sacrifice from Dayton, who made new income taxes a central campaign message last year and the centerpiece of his budget. He dropped that and said he would accept — with conditions — an offer the GOP put forward on the eve of the shutdown to bring about $1.4 billion into the budget by delaying payments to schools and selling tobacco payment bonds.’

Note: “Delaying payments” is not solving the problem. Unfortunately AP also reported:

‘(Republicans) conceded to higher state spending than they had wanted. Republican lawmakers spent months insisting that the two-year budget be capped at $34 billion, the amount the state was projected to collect without new sources of money. Instead, it will be closer to $35.4 billion.’ 

So spending increases won and Democrats won. And look at what else happened in Minnesota, according to AP:

‘The shutdown has… also prevented entrepreneurs and professionals from getting state licenses. The latest licensing snag threatens to stop the sale of Miller, Coors and other popular beers in the state within days. Payments by the state to schools and local governments have continued, and a court has taken some of the pressure off by restarting the flow of cash to programs ranging from child care assistance to home meal services for the elderly.’ 

In other words, wealth-creating enterprises were being hampered in the shutdown (licenses for entrepreneurs) while wealth-consuming enterprises (schools and local governments, child care assistance and home meal services for the elderly) continued to be funded even during the crisis. This is socialism at work, friends.

Oh, of course, we are supposed to think that fishing licenses and other entrepreneurial activities like, say, building permits, are not nearly as important as home meals for the elderly or schools. But in the long run, they are much more significant because they create the wealth that all these government programs consume.

But under socialism, wealth-consuming programs grow and grow and grow and are protected and defended – even by the courts in a crisis – while wealth-creating enterprises wait on the back burner.

This is what is happening all over America. Obama recently said that “70 million” federal checks are going out to Americans. How did we create so much dependency?

By letting liberals insistently focus more and more on the wealth consumers and less and less on the wealth creators. It is all very incremental and has been happening for decades. Because under socialism, the wealth creators are marginalized. That is why so much wealth-creating manufacturing and resource extraction (mining, oil drilling, logging etc.) have been thwarted in the US while our welfare state continues to flourish unabated.

So indeed the Democrat governor of Minnesota lost on taxes, but Democrats really won big and have been winning for decades. Because government spending has continued to grow and grow under its own inertia and will continue to grow unless real reforms are made. Because once any government program is instituted, more and more people become dependent on it. Then its bureaucracy grows and grows. Then we are told that we cannot do without it all.

Consider this disturbing analysis from the Wall Street Journal online edition last Spring called We’ve Become a Nation of Takers, not Makers in which Stephen Moore explains why our nation is in such economic straits by pointing to educational spending:

‘Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.’

Look at that astounding statistic. ‘…public-school employment doubled per student, according to a study by researchers at the University of Washington.’ In other words, the “baseline” level for spending on public schools now includes twice as many employees per student as it did 40 years ago. And then we are told that we cannot cut any of these valuable employees, that they are working “for the children”.

Nonsense. And no wonder we cannot grow economically. Because we have twice as many people, or more, as needed in many sectors of our government. And for those who grew up in the 1960s, the public schools were much better then with half the employees per student as today. Because education it is not about money or numbers or union power, but it is about quality and dedication.

So until real reforms are made and government spending is cut significantly from the elevated baseline level that we accept today, our nation will wither on the vine from oppressive demands on the taxpayer that drain the private sector of capital needed for growth. Perhaps the people of Minnesota – and every other state – can begin reform by firing 50% of the employees in their public education systems. Just for starters.

It is time to expose the “takers” in the federal budget and in state budgets too. They all must go. The only answer to our fiscal crisis is deep spending cuts to bloated governments.

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