Our nation is experiencing economic crises, perhaps the most significant since the Great Depression of the 1930s. This is largely due to the COVID-19 pandemic; efforts to minimize its contagion both here and throughout the world are a top priority.
Before the onset of the pandemic, annual federal budget deficits were projected to total $1.1 trillion this year. Such an unsustainable debt trajectory during a period of strong economic growth is most unusual. After the costly containment of COVID was undertaken, the 2020 projected budget deficits now total more than $3.8 trillion (18.7% of GDP) this year. A recent estimate of our federal debt is $26.5 trillion.
Some $2.4 trillion of the near-term increase of debt is the result of enacted bipartisan federal legislation — including almost $200 billion from the Families First Coronavirus Response Act, $1.7 trillion from the Coronavirus Aid, Relief and Economic Security Act, and nearly $500 billion from the Paycheck Protection Program and Health Care Enhancement Act and Paycheck Protection Program Flexibility Act.
More such funding proposal packages will likely be enacted, and the debt will increase.
The respected Committee For A Responsible Federal Budget projections show that:
• Deficits will expand by $5.7 trillion over the 2020-2030 period, to almost $20 trillion under current law.
• The deficits will expand by $3.7 trillion in 2020 and average $1.6 trillion per year from 2021 through 2030.
• As a share of the economy, debt will grow from 79% of GDP before the crisis to 118% of GDP by 2030.
• All major trust funds will exhaust their reserves in just over a decade, including the Federal Hospital Insurance Trust Fund (by 2023) and Social Security Trust Fund by 2031.
The Minnesota Management and Budget (MMB) interim state budget forecast showed a $4 billion flip into the red from the February projection of a $1.5 billion surplus, to a projected $2.5 billion deficit. Biennial state income tax collections are projected to be down by at least $1.7 billion from the February forecast and state sales taxes down by $1.35 billion. There are no updated projections for the out-biennium because of the uncertain evolution of ongoing crises and their economic impact.
Gov. Tim Walz and policymakers rightfully take fiscal responsibilities seriously in approving and overseeing a two-year budget — currently at $5.6 billion and rising. Either directly or indirectly, this budget employs an estimated 122,000 full-time state and local government workers. These numbers are declining, however.
Lost in COVID-19 and the upheaval after the George Floyd police killing, the state’s projected $2.5 billion deficit is on the agenda for lawmakers who are finding it difficult to accomplish anything of importance. “The longer we wait, the more difficult this issue will be to tackle,” Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence, has warned.
Haveman’s group has long provided advice on sound state tax policy, efficient spending and accountable government. (See fiscalexcellence.org/)
Successive special sessions of the Minnesota Legislature this summer have been largely unproductive on the fiscal front with no action on the bonding bill and various tax proposals thus far.
One idea for Walz and his administration to consider in shaping accountable state budgets is in the preparation of more detailed fiscal notes on legislative proposals. Such a practice could not only better estimate costs but could be expanded to explain how such proposals affect race and social justice. More specifically, advance an understanding of how a tax or fee affects people of color or specific neighborhoods. In part as a response to the turmoil underway since May, such information could be of great value to the state and its leaders.
Myron Frans, who recently left his job as commissioner of Minnesota Management and Budget (MMB), has offered advice regarding an efficient and effective state government, a world-class workforce and responsible financial management.
Frans’ idea is for the state to be a model employer with a workforce that reflects the rich diversity of those served, and to be a responsible steward of public resources. The MMB’s values are fivefold: leadership, diversity, excellence, innovation, and integrity.
Blind activist Helen Keller, who died over a half century ago, famously said that “optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.”
Chuck Slocum, founder and president of The Williston Group, can be reached at Chuck@WillistonGroup.Com
"fuel" - Google News
August 24, 2020 at 02:02AM
https://ift.tt/2Qg2BXa
Pandemic has added fuel to government debt fire - Minneapolis Star Tribune
"fuel" - Google News
https://ift.tt/2WjmVcZ
Bagikan Berita Ini
0 Response to "Pandemic has added fuel to government debt fire - Minneapolis Star Tribune"
Post a Comment