State deficit spending

Recession

Recession (Photo credit: Anders V)

According to Scott Walker, one lesson from the recall election is that you can’t spend more than you have. That is true now and forever of all states which are not permitted deficit spending. It is NOT a new lesson. Only the Federal government can use deficit spending to stimulate the economy. States are required to raise taxes or lower spending to balance their budgets. In most previous recessions, it was a common practice for the Federal government to give money to the states so that they needed not to reduce expenditures or raise taxes so much in a recession making the recession worse. This time the GOP wants to make the recession worse so that the voters will vote for the Republicans in November.

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