Republicans like to talk about “fiscal responsibility,” but their administrations also run up debt. It seems they don’t know what that phrase means. (More)
Governments are not exactly analogous to businesses or households, but there are some fiscal similarities. Businesses and households sometimes borrow for large or long-term investments, as do governments. Businesses and households may have varying revenues and varying expenses, as do governments. And most businesses and households have irreducible overhead expenses if they are to keep functioning, as do governments. Put it all together, and “fiscal responsibility” – for a business, a household, or a government – is more complex than “pay as you go.”
Three times recognized for his efforts by Texans for Fiscal Responsibility, Representative Parker believes in a sound fiscal approach that is centered on responsible spending and reducing taxes. In 2007, he was part of the largest property tax reduction in our nation’s history. That same year, he supported successful legislation that reduced and then refroze property tax rates for seniors and disabled citizens. Then again in 2009, Representative Parker co-authored legislation that removed an additional 40,000 small businesses from the franchise tax rolls. His efforts have helped Texas to achieve the designation of spending less per-capita than any other state in the nation.
During the 2011 session, Representative Parker supported a state budget that reduced spending by 8.1 percent so that Texas could continue its tradition of living within its means without raising taxes. In the past, he has championed legislation to further prohibit a state income tax in Texas and to also dedicate budget surpluses to further property tax relief. His priorities for the future remain: opposing unnecessary increases in government spending, reducing taxes and returning future budget surpluses to Texas taxpayers.
Well, to some Texas taxpayers. It turns out Texas has one of the 10 most regressive state tax systems in the United States, according to a 2009 study by the Institute for Taxation & Economic Policy. Texans earning less than $18,000 per year pay 12.2% in total state taxes, as compared to just 5.3% for those earning over $186,000 per year and a mere 3.3% for those earning over $463,000 per year. What’s more, property taxes – the taxes Rep. Parker proposes to cut whenever the state has a budget surplus – are the most equitable part of Texas’ tax structure.
In other words, when Texas collects more revenue than needed for the state budget, Rep. Parker would give poor Texans a tiny tax cut and rich Texans a huge tax cut. And if tax revenues fall short, Rep. Parker would cut spending to make up the shortfall. This, he claims, is “fiscal responsibility.”
But let’s consider how that would work for a business. If business is booming and brought in more money than budgeted, Rep. Parker would give the surplus to the shareholders. But no business booms every budgeting period. When revenues fall short, Rep. Parker would say it’s time to trim the budget: cut back on advertising, shut down some projects, lay off some employees, maybe move to a smaller building. The next time revenues are up, Rep. Parker would again give the surplus to the shareholders. The next time business is flat, he’d trim the budget still more.
You don’t need an MBA to see where Rep. Parker’s and the Republican model of “fiscal responsibility” leads. Sooner or later, inevitably, any business run on that model will be … out of business.
Refusing to invest surplus revenue against inevitable down times is not “fiscal responsibility.” It’s fiscal suicide.