Here is our latest installment of the Daily Austerity Watch, 24/7 Wall St.’s summary of the major news off efforts by governments to bring their fiscal houses in order.
US Government: The game of fiscal chicken between the Democrats and Republicans on Capitol Hill is reaching a dangerous new level. Media reports indicate that a government shutdown is becoming more likely. However, all hope is not lost. According to the Wall Street Journal, Democrats and the White House are crafting a proposal to slash an additional $20 billion in cuts in federal spending in addition to the $10 billion Congress had already agreed to do. Will it be enough? Probably not given that Republicans in Congress are seeking $61 billion in cuts and Tea Party activists are pressuring the party not to give an inch on fiscal matters.
New York: It’s sad when the fact that New York passes its state budget on time is considered newsworthy, but that’s what Democratic Gov. Andrew Cuomo managed to pull off. The first term governor and the Legislature today announced that they had reached a deal on a $132.5 billion spending plan that cuts spending by 2%, the first decline in about a decade. It also erases a $10 billion deficit with no new taxes.
“This budget makes tough choices, which is what you sent me to Albany to do,” Cuomo says in a press release, adding that the spending plan “redesigns government to force it to cut waste and inefficiency, and finally delivers real results for hard-working families across New York State.”
Cuomo was able to gain support for the agreement because he convinced leaders in the Legislature and the state’s powerful unions that the agreement was the best deal that they could get. Some, such as New York Mayor Michael Bloomberg, are fuming over cuts in education aid. He has threatened layoffs of more than 4,600 teachers.
Minnesota: Gov. Mark Dayton(D) and Republicans in the Legislature are at odds over the proposed state budget as they try to close a $5 billion deficit.
As the Star Tribune notes, a settlement is nowhere in sight. For one thing, Dayton wants to increase income taxes on top earners, an idea that the GOP refuses to entertain.
“Republican legislators are cobbling together a budget outline that prevents income tax increases but appears destined to prompt a veto by the governor,” the paper says. ” Republicans controlling the Legislature are seeking deep cuts in aid to the Twin Cities and steep reductions to health and human services, which could boot thousands of Minnesotans off public programs.”
New Hampshire: Legislators are trying to keep their promise to eliminate the state’s unpopular $30 vehicle registration fee. Unfortunately, members of the House Budget Committee have to figure out how to make up the $90 million in lost revenue, according to the Associated Press. Republicans are at odds with Gov. John Lynch (D) over the proposed two-year $10.2 billion budget.
Lynch argues that his plan, which cuts spending by 7% over current levels, “protects our state’s strategy for success, keeping taxes low and making smart investments in education, health care, public safety and economic development.”” Republicans counter that Lynch’s spending plan is based on overly optimistic assumptions.
–Jonathan Berr
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