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Bailout for states wrong idea

By MARK SANFORD  Tuesday, November 18, 2008

1 comment(s) | Default | Large

I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.

But I suspect I'm not entirely alone, as there are a lot of taxpayers who aren't pleased with Christmas coming early for politicians. And I hope these taxpayers make their voices heard before Democrats load up the next bailout train for states with budget deficits.

Several questions led me to oppose bailing out the states. They are worth asking, even if you supported bailing out Wall Street.

* Who bails out the "bail-outer"?

Washington is short on cash these days and will borrow every dime of the $150 billion to $300 billion for the "stimulus" bill now being worked on. Federal appetites may know no bounds. But the federal government's ability to borrow is not limitless. Already, our nation's unfunded liabilities total $52 trillion -- about $450,000 per household. There's something very strange about issuing debt to solve a problem caused by too much debt.

* Do you now have to be a financial "bad boy" to win?

Community bankers tell me that they are now at a competitive disadvantage for being careful about who to lend to, because others that were less disciplined will get a federal bailout. This is also true for states. Those that have been fiscally responsible will pay for or lose out to the big spenders. California increased spending 95 percent over the past 10 years (federal spending went up 71 percent over the same period). To bail out California now seems unfair to fiscally prudent states.

* Was the economist Herb Stein wrong when he said that if something cannot go on forever, it won't?

Medicaid grew 9.5 percent annually over the past 10 years. That's unsustainable. But if Congress opens the checkbook now, there will be no reform.

* Isn't government intervention supposed to be the last resort and come only when it can make a difference?

In 2008 bailouts became the first resort. Over the past year the federal government has committed itself to $2.3 trillion (including the tax rebate "stimulus" checks of last February) to "improve" the economy. I don't see how another $150 billion now will make a difference in a global slowdown. We've already unloaded truckloads of sugar in a vain attempt to sweeten a lake. Tossing in a Twinkie will not make the difference.

However, there is something Congress can do: free states from federal mandates. South Carolina will spend about $425 million next year meeting federal unfunded mandates. The increase in the minimum wage alone will cost the state $2.6 million and meeting Homeland Security's REAL ID requirements will cost $8.9 million.

Based on what I saw in Washington, the bailout train is being loaded up.

Taxpayers will have to speak up now to change its freight, tab or departure.

Republican Mark Sanford is governor of South Carolina.

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1 comment(s)
The following comments are reader submitted. They do not represent the views of The T&D or Lee Enterprises.

rbrtsndr912 wrote on Nov 23, 2008 11:37 AM:

" I couldn't agree with you more but I don't believe that the politicians are responding to the people and I'll explain. During the wallstreet bailout I was one of those that sent in emails to congress and the president and my vote was no. As you will recall the majority of the country had voted no. On the day of the vote they posted a telephone number that you could call, a number for no and a number for yes. I attempted to call the no number all day, could not get thru, busy. The switchboard was swamped with people calling in to vote no. Across the country citizens were telling their congressmen NO. But the bailout went thru. As of today, my 401k and your 401k has lost half of it's value, exactly one of the things that Paulson said would be stopped with the infusion of liquidity into the financial markets by "buying" up bad mortgages, which they didn't do. So, since the bailout, foreclosures have continued as the same pace as before, everyone has lost money (college's have had to do massive cutbacks and raise tuition because their money is also in the stockmarket) and the only ones to benefit are the ones that have been selected for the money, they of course could do whatever they wanted with it as AGI demonstrated quite openly with their flagrant trips and the financial giants with their bonus's. So as our country slips farther and farther into debt that we don't have a prayer of paying for who is standing by the sidelines watching and hoping? Every economist is telling us as individuals that we should be getting ourselves in order. Pay down our credit, start saving something, live within our means. How about this country, this state, this city etc. doing the same. Everyone thinks they can get on a corporate jet and fly to
Washington and get "free money", why is that? Can you do that? Do you really think that the check you received that they called a tax rebate was your "bailout"? What did it bail you out of? Were you able to pay off your car loan, your mortgage, your credit card, your health bill? Unless you got a lot more than I did you weren't able to do much more than pay a few necessities. Well, Governor, I will do my part about making my voice heard with our congressmen but the trend certainly favors the handouts. "



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