Watching the budget process in Concord and Washington unfold — with tales of crises due to lack of resources and revenue, and the resultant need to cut services, eliminate departments and reduce benefit levels — leads to a number of observations.
In Concord, where the biennial budget process has been playing itself out, Gov. Ayotte proposed an austere budget, and the House, using its own lower revenue estimates, cut that budget substantially.
The House proposed eliminating government agencies like the Council on the Arts, replacing some, like the Board of Tax and Land Appeals, with a judge, while cutting the judicial budget (an idea later reversed, thankfully), and cutting Medicaid reimbursement rates by 3%.
It also tried to cap the amounts local school budgets could increase, an idea later reversed by the House, and put a number of non-budget items in the bill that was passed.
This will now be reviewed and reworked by the Senate, with input from the governor, who has said she wants some of the House proposals reversed. Ayotte did not call for any further tax reductions.
She still contends that her revenue estimates allow higher spending than the House anticipated. The Senate will have the advantage of later revenue estimates, which often allow higher spending, although there is uncertainty this year due to the economy and the effect of federal actions to cut grants and other revenue shared with the states.
The issues faced in Concord are the result of a number of factors, including the end of COVID-related federal spending, and also the questionable elimination of the Interest and Dividends tax over the last several years, which has reduced state revenue by $150 million from the last year of its existence.
This tax was paid by the most affluent citizens. The almost religious belief by some, largely Republicans, that taxes are evil and should be reduced and certainly never raised — EVER — is contrary to logic and the function of taxes.
Taxes exist to pay for what we collectively decide to do together. That is called government.
When we decide to do more, we have to raise more money through taxes and fees or other income-producing activities. The current “crisis” in Concord is largely self-inflicted.
Solutions to solve the problem include reducing spending — including on services that help the most vulnerable among us — and expanding “charity” casinos and adding real slot machines also are anticipated to raise significant funds. This merely adds to New Hampshire’s reliance on “sin taxes” and sources to be paid by non-residents.
It would be refreshing to see a real analysis of our current revenue sources and potential alternatives.
Viewing the budget processes in Washington is far more troubling. The federal government has had deficit spending continuously since the 1980s, with the exception of a couple of years in the 1990s.
The deficit is the difference between what the government takes in and what it spends. The national debt is the accumulated borrowing required to make up that difference.
At present, the national debt is greater than the gross national product, a dangerous situation, according to most economists.
Presently, in Washington, the President and his allies in Congress want to extend tax cuts enacted in 2017, which resulted in then-record deficits, made worse due to the spending during the COVID pandemic and then the Biden infrastructure and other spending bills.
Rather than proposing to restore revenue by letting the tax cuts expire, as scheduled on Dec. 31, 2025, and cutting spending, recent actions by the House, and then the Senate, resulted in a “concurrent budget resolution.” It sets the outline for the federal spending plan. As designed by the Senate, and concurred with by the House, the plan does the following:
• Adds $5.8 trillion dollars to the federal deficit through fiscal year 2034.
• Includes a permanent extension of the expiring 2017 tax cuts using a trick calling them “current policy.”
• Requires only $4 billion in gross deficit reduction, compared with the House’s original $2 trillion in reductions.
• Pushes annual deficits to $3.4 trillion by 2034.
• Doubles the growth in debt-to-gross national product.
• Removes the debt ceiling for all practical purposes.
“This budget sets the stage for the largest deficit increase in history — an unprecedented bill that requires just $4 billion in savings to offset up to $5.8 trillion in deficits,” said nonpartisan Committee for a Responsible Federal Budget.
The Senate took the House’s borrowing allowance and more than doubled it, clearing the way for a bill that could borrow more than the American Rescue Plan, TCJA, CARES Act, and bipartisan infrastructure law combined. Meanwhile, the Senate shrunk the House’s required spending cuts by 99.8%.”
More self-inflicted harm — on a massive scale. It has to stop.
Brad Cook is a Manchester attorney. The views expressed in this column are his own. He can be reached at bradfordcook01@gmail.com.
