Chaffetz: We're gonna have a difficult time until we get more testing
Fox News contributor Jason Chaffetz reacts to President Trump's meeting with COVID-19 survivors.
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While the federal government has been appropriating trillions of borrowed dollars to deal with the massive economic impact of the coronavirus pandemic, state and local governments have failed to deal adequately with their skyrocketing expenses and shrinking revenues. We will all likely pay a heavy price.
In an event not seen in any of our lifetimes, a virus has caused our booming economy to come to a screeching halt.
Whether you agree with President Trump’s response or not, the reality is that the federal government is the only entity that can simply print more money – states, counties, cities, towns and other local governmental units cannot.
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The failure of state and local governments to act in the best interest of the taxpayers by addressing the economic challenges created by the coronavirus pandemic now – rather than waiting until later – is going to reverberate throughout our country for the foreseeable future.
Governments reliant on sales tax revenues are going to be devastated, since millions of us are staying at home and only venturing out buy food and other essentials. Governments relying on income taxes will also take a big hit, since unemployed workers have much lower taxable incomes. Property tax collections are likely to also drop, since some jobless workers will be unable to pay their taxes on time.
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I’m not aware of many state and local governments that have moved to curb their spending in the face of this crisis. I don’t even hear them talking about the possibility of having to make spending cuts.
State resources will be stressed to the maximum to deal with health care costs and big increases in unemployment caused by business shutdowns due to the pandemic. While the cost of helping the unemployed will have to increase, state and local governments are not doing much to make the tough decisions needed to cut expenses elsewhere to balance their budgets.
State and local government pension funds will fall even further behind in their funding. For far too long, pension managers have snookered the public and retirees with wild projections on their returns from their investments. Some projected 7 percent annualized returns that were unrealistic even in good times.
Now state and local government retirees who failed to convert to a defined contribution plan rather than a defined benefit plan will find themselves in a truly dire situation.
When I served in the House of Representatives, Rep. Devin Nunes, R-Calif., and I worked on this problem by trying to get the state and local governments to verify their current obligations compared to their ability to pay. We met with resistance at all levels.
This is a multitrillion-dollar problem that will inevitably leave retirees with the cruel reality that they were lied to for decades and their promised retirement benefits are simply not there to be paid.
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Taxpayers should rightly be concerned that politicians who failed to plan and failed to save for a rainy day are now unlikely to make quick and tough decisions.
Not many of us expect state and local governments to address these problems head-on by cutting spending. Instead, expect requests for federal bailouts and higher taxes. Both compound the challenge of restarting the economy and neither solves the underlying issue.
Millions of taxpayers have been forced – through no fault of their own – to stop contributing to the economy. They shouldn’t now be forced to prop up bloated state and local governments.
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Nobody wants to be in this situation, but unfortunately, it is the reality, and reality is the most difficult thing for politicians to deal with in real-time. It takes guts, making hard decisions, and speaking the truth that some things need to be sacrificed so we can prioritize what is most important.
This has rarely happened in the past, but let’s all hope it happens now. It’s time for state and local government officials to show bold leadership when it comes to their own budgets. The citizens who elected them deserve no less.
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