Budget deficits are a thing of the past in North Carolina, but could Gov. Roy Cooper bring them back? One of the most debilitating expenditures for all states is the acceptance of federal dollars for entitlement programs, particularly Medicaid. Expanding the program is a tantalizing decision for lawmakers, since the full cost is not immediately felt. By 2020, a 10 percent share from the state is required to help offset the expansion. It will then cost North Carolinians an additional $6 billion through the decade.Cooper, who desperately wants to expand the program, as well as federal power and dependency in North Carolina, still offers up misguided claims of its benefits. One of the biggest potential harms for North Carolina is the return of spending deficits. This is often exacerbated, as past governors have proved, by raiding the rainy day fund or other emergency cash to help pay for federal programs’ cost shares.Of course, when a government runs a deficit, it means revenue does not keep pace with the expenditures. The government then has to make up the revenue through cuts, higher taxes, and/or deficit spending.Deficits, however appealing to many politicians, are a form of higher taxes too. Politicians love to promise an expanding amount of services while kicking the proverbial can down the road, punishing future taxpayers by eating away at their earnings and savings. Government deficits usually occur because of some form of profligate spending, and it disrupts economic growth by crowding out private-sector markets and investment.The danger of unsustainable deficits is most visible today at the federal level. It causes inflationary policies, because currency has to be inflated to absolve some debt, which is devastating to the most vulnerable the poor and retirees on fixed incomes.Former Indiana governor Mitch Daniels received considerable attention in 2011, when he called the nation’s federal debt “the new Red Menace.” But today, there is too little urgency to solve the problem or even seriously address it. The federal government is broken because of its unwillingness to place future financial security over its ever-expanding political decrees and power. The religious left well personified by Raleigh’s “Moral Monday” crowd likes to parrot the line that “budgets are moral documents,” but entirely misses the point that morality includes a theology of thrift and essential belt-tightening measures.While the North Carolina General Assembly has made a solid commitment to fiscal responsibility and sustainability in recent years, relying on more federal funding could undo important gains as well as put the state on an unsustainable spending path. If that happens, the consequences are higher taxes, higher spending, and a less business friendly environment, punishing employers and employees alike.Centralized planning offers a myriad of promises but the results are little more than taking money and turning it over to unproductive outcomes. North Carolinians must avoid the spending and dependency trap, and lead the fight to stop Washington from throwing away our future.Ray Nothstine is a member of the North State Journal’s editorial board, separate from the news staff. Unlike other newspapers, the North State Journal does not publish unsigned editorials; the author or authors of every editorial, letter, op-ed, and column is prominently displayed. To submit a letter or op-ed, see our submission guidelines.
Editor’s note: South Carolina threatened to resist federal tariff acts of 1828 and 1832 and thereby “nullify” federal authority to pass national laws. President Andrew Jackson, a staunch state’s rights supporter and patron saint of […]
The North Carolina Department of State Treasurer (DST) touches the lives of one in 10 North Carolinians every month. We manage the 26th-largest pool of money in the world valued at more than $110 billion. […]