All across America, families are balancing their budgets and even paying off debt. Since the financial panic of 2008, personal debt has fallen as Americans tighten their belts and pay back loans. Some, unfortunately, had to declare bankruptcy because their debts got too big. Washington cannot declare bankruptcy; it must instead follow the example of millions of Americans and cut spending to live within its means.
Most state governments, likewise, have managed to balance their budgets, even during these hard times. A few states, notably California and Illinois, continue to follow the federal government’s profligate example. A few raised taxes to get their fiscal houses in order, but most simply reduced spending. Several very large states with financial challenges, like Texas and Florida, balanced their budgets without any income tax at all by reducing spending. They are showing the way.
Washington could use the guidance. President Obama promised to cut the annual deficit in half in his first term. Instead, his budgets include near-trillion-dollar deficits as far as the eye can see. Unlike most state governments, and unlike America’s families, President Obama has to this point refused to do the serious work of cutting spending.