Like a rock tossed in a pond, the ripples from the banking/financial sector meltdown continue spreading.
While the hot-shot traders and CEOs, whose fast and loose shenanigans caused the problem, are being handed billions in bonuses for 2009 profits they racked up while using taxpayer bailout money for almost everything except the lending they were supposed to do, Joe and Jane Taxpayer continue to get their pockets picked.
It’s kinda like the old country song: They get the goldmine, we get the shaft.
As if things weren’t grim enough with the $1 trillion (or more — nobody really seems to know) in extra debt the federal government has taken on in its various rescue plans (total U.S. debt is now over $12 trillion), the millions of people who’ve lost jobs, the thousands of businesses that have closed, and the real estate market that continues beset by foreclosures both residential and commercial have all resulted in the most precipitous decline in tax revenues on record for state governments.
Unemployed people don’t pay the income taxes that help support national and state governments. People who’ve lost their homes don’t pay the property taxes that help support local governments.
Nationwide, state governments, having already made spending cuts totaling nearly $150 billion for fiscal 2010, are collectively dealing with more than $30 billion in mid-year revenue shortfalls as tax revenues have lagged even the most pessimistic forecasts.
As federal stimulus programs dry up, the picture for 2011 is even more grim — a projected shortfall of $97 billion, which could be worse if the economy doesn’t improve.
All this has forced governors and legislatures to take an ax to programs and services, ranging from schools to mental health to driver’s license renewals, and to increase fees and taxes.
In my state of Mississippi, which in December recorded its 16th consecutive month of below projected revenues, the governor has asked the legislature for $226 million in cuts, including a very controversial consolidation of eight public universities into five and 152 school districts into 100.
State agriculture and Extension programs, which have undergone considerable shrinkage in recent years, are among those facing further budget cuts in nearly every state, some of them quite steep. The Mississippi State University system was asked by the governor for a total of 8 percent in cuts for fiscal 2010, 13 percent for 2011, and possibly more than 20 percent in 2012.
Unemployment nationally, which has topped 10 percent, is expected to remain high even beyond 2010, which will continue to depress state revenues from both income and sales taxes, while keeping demand for public assistance programs such as Medicaid at high levels.
The picture isn’t a pretty one. But as we pay more for less, aren’t we comforted to know the Wall Street wizards are raking in billions in bonuses for making us poorer.