Case in point: I live in Illinois, a state that is on the verge of bankruptcy for a whole bunch of reasons not limited to having two governors in a row indicted for corruption (one of whom is currently in prison). We have some serious problems here, including a $12.8 billion budget deficit, $5.1 billion in unpaid bills, and $2.25 billion in short-term loans.
Many of my fellow Illini are in denial. Last week, the TV news was interviewing someone in a conservative public policy group about their plan to help the government cut spending so that we don’t have to have tax increases. The state legislators should approach this the way a family would, the man said. They should sit down and look at how much money they have, then pay the most important bills first, and cut back if they don’t have enough money for everything.
One of the reasons that I hate the term “common sense” is that it tends to eliminate critical thinking. Unless a family has become devotees of Dave Ramsey, their first response to an income shortfall is probably debt. The average American held $43,874 in debt at the end of 2009, including mortgages and student loans. This is just less than our per-capita GDP of $46,400. Household debt is down 1.7 percent from 2008, mostly because of defaults.
Default, of course, is another way that households deal with debt. The American Bankruptcy Institute reported that 1.4 million households filed for bankruptcy in 2009, up 31 percent from 2008.
Now, I’m not sure that anyone will lend Illinois more money, and bankruptcy is not going to make the state stronger. Hence, two of the options that many households rely on are out for the state.
What about getting more revenue? When my husband, an environmental scientist, was unemployed a few years ago, I took on lots of extra work. I worked weekends. I worked holidays. I took on a directory update project for a trade association, which is about the most boring thing project a freelance writer can do. My husband did emergency response work and took on temporary field projects that he had not done for years. We turned out okay, thank goodness, in part because we were able to find the work. We’re not alone in this, either; I understand that not everyone is qualified to take on a trade association directory project, but it was generally decided last winter that the school kids on our block should not earn extra money from shoveling snow because an adult male neighbor from the next block started knocking on doors when the snow fell, looking for work.
The best way for a state to pick up extra revenue is through a tax increase. But although families look for extra revenues to help them through tough times, it’s been universally decided that it is always and everywhere bad for governments to raise taxes no matter what the data show. Illinois isn’t exactly a taxation machine, either. The state has a flat income tax of just 3%, with a total tax burden that places us 30th in the nation.
Another way that families look to bridge their financial gap is by one-time sales of various assets. A yard sale might bring in enough money to cover new shoes for the kids. Selling off inherited knick-knacks on eBay can make for a good Christmas. But once Grandma’s Hummels are gone, they are gone. Next Christmas, the family will have to something else.
State and local governments do one-time asset sales, too. At the end of 2008, the City of Chicago sold the right to operate its parking meters for 75 years; the money is already gone. Illinois has been trying to privatize the lottery, but no deal has been approved yet. But what happens once the lottery is sold? What’s the
I have no doubt that there is waste in Illinois government; just as I have no doubt that there is waste in my budget or in yours. But it’s not easy to cut waste. Is that $10 a month for eMusic unnecessary or a bargain at twice the price? Is a state university system a frill for the middle-class or a key to the state’s long-term vitality? Sure, you can move from brand-name Cheerios to the store brand Toasted Oats, but the family still has to eat.
Budget cuts will not solve all of Illinois’s problems, just as they won’t solve all of a family’s financial problems. The “family budget’ trope is an old one. It does apply to government, but not in the way that the people who use it hope that it will.