Voting for Fiscal Responsibility

The $26.1 billion state bailout bill passed by the Senate this week was fiscally irresponsible.  It increases the deficit by $22 billion in the first year alone.  It included a permanent tax increase for one year of new spending, which further increases the size of government.

There’s no justification for this kind of spending, considering the incredibly irresponsible management of state funds by big states like California, New York, Illinois and Pennsylvania.  Those four states had the largest budget amount reserved for the increase in federal funds.  They’re counting on this extra check from the federal taxpayers, and the Senate majority is delivering it at everyone else’s expense, including Iowa taxpayers’.

Major employers have been clear that the tax increases used to offset this bailout will jeopardize jobs.  Three major Iowa employers -- John Deere, Rockwell Collins, and IBM – were opposed to this bill.  Deere has more than 15,000 employees in Iowa. Rockwell Collins has 10,111 employees in Iowa.  IBM has 1,300 employees in Iowa.  There likely are even more Iowa employers in opposition.  With tens of thousands of Iowans depending on these companies for employment, the last thing we should do is raise taxes and put their jobs at risk.

The National Association of Manufacturers says an estimated 22 million people in the United States – 53 percent of all manufacturing employees – are employed by companies with operations overseas.  Such companies would have to pay the $9.6 billion of tax increases in this legislation.  The manufacturers say the increases “will jeopardize the jobs of American manufacturing employees and stifle our fragile economy.”

I'm not increasing taxes on Iowa employers and putting jobs at risk to pay for big states like California, New York, Illinois and Pennsylvania to prop up their oversized Medicaid programs.

There were far better funding options, if a bailout had to happen, starting with unspent stimulus dollars.  About $35 billion of the $100 billion in education aid to states from the stimulus was not spent as of a July 9 report from the Department of Education.

The $26.1 billion the Senate passed is nothing more than a bailout to state governments.  And it contributes to a vicious cycle.  States have expanded their Medicaid programs to levels that make them unaffordable.  The federal government is stepping in to assist states to the unprecedented degree of becoming the largest revenue source for the states.  In an effort to pay for the additional federal assistance to states, Congress is advancing a job-killing tax on exporters, including Iowa companies that will ultimately make it more difficult for states to collect the revenues they need to wean themselves off of federal assistance.  This cycle should be broken, and it’s irresponsible to support more legislation that furthers it.