The number one goal for fiscal policy is to reduce the burden of government spending.
The simple way to achieve this goal is to adhere to Mitchell’s Golden Rule and and make sure the private sector grows faster than the public sector.
But when politicians fail to exercise that modest amount of fiscal restraint, bad things happen.
Consider my state of Virginia, which is largely controlled by Republicans. Except party labels apparently don’t mean much because state spending has been growing at twice the rate of inflation.
And when politicians engage in profligacy on the spending side of the fiscal ledger, it’s just a matter of time before they engage in greed on the other side of the fiscal ledger.
That’s certainly happened in Virginia, where the interest groups, lobbyists, bureaucrats, and politicians just achieved a major victory over taxpayers.
The Wall Street Journal is appropriately disappointed.
"I hope you’re not upset that I'm copying your fiscal policy, Mr. President"
There’s one thing uglier than a Democratic tax-and-spend spree. A Republican one. On Friday Virginia Governor Bob McDonnell and a GOP-run legislature approved a five-year, $6 billion transportation bill financed almost entirely with higher sales and car taxes.
Here are some of the grim details.
The sales tax rises to 6% from 5% in Hampton Roads and populous Northern Virginia and to 5.3% everywhere else. The hated car tax (which Republicans once vowed to eliminate) rises to 4.3% from 3%, meaning a new $30,000 car or truck will come with a $1,290 tax bill. Then there’s a new 0.25% sales tax on homes in Northern Virginia, plus a new hotel tax.
More taxes, not surprisingly, will mean more spending.
Mr. McDonnell even cut an 11th-hour deal with Democrats over the expansion of Medicaid under ObamaCare. …Mr. McDonnell says the commission means Virginia won’t expand Medicaid as long as Republicans control the legislature, but wait until the hospital lobby gets done working the same Republicans who raised taxes.
The governor doubtlessly has made lots of friends with the interest groups that dominate Richmond, so he’ll have plenty of opportunities to cash in when he leaves office.
The state’s taxpayers, by contrast, won’t be so lucky. And now the GOP is now divided and dispirited and will face an uphill battle in this November’s elections.
This fiasco will haunt Republicans in a state that holds elections in November. Probable Democratic nominee for Governor Terry McAuliffe endorsed the bill knowing it erases any GOP advantage on taxes and spending. Mr. Cuccinelli, the likely Republican nominee, opposed the bill but must now find a way to rally a splintered GOP and demoralized conservatives. At least Republicans can erase Mr. McDonnell’s name as a national candidate or VP choice in 2016.
I don’t lose a lot of sleep worrying about Republican political prospects, but I am irked that politicians are taking more of my money for their vote-buying schemes.
To add insult to injury, I’m not rich, so I don’t have the ability to directly benefit from tax competition by moving to a zero-income-tax state such as Florida or Texas.
And moving to Maryland or DC would be jumping out of the fiscal frying pan and into the tax fire, so that’s also not an option.
