Leading by Example
The Bush administration announced this week that the federal deficit could reach an unprecedented high, $482 billion, next year, even as all 50 states work to balance their budgets amid an economic recession and a national mortgage crisis.
Citizens in our states and across the country face skyrocketing costs for food, gas and energy. Sadly, these difficulties are compounded by wages that have remained stagnant, rising unemployment, a shell-shocked stock market and a federal government that has failed at almost every turn to invest in America's shared priorities and future.
The challenges to making ends meet are profound. That's why we have come to our nation's capital today in our capacity as governors to call on the federal government to help all states navigate an economic crisis the likes of which we have not witnessed since the Great Depression.
New York is dealing with many of the issues other states face in terms of housing foreclosures, rising unemployment and devalued pensions. But the declines in the financial sector in particular have deep repercussions for jobs and tax revenue in New York state. Projections for this year indicate that capital gains will decline 24 percent and that financial services bonuses will decline 20 percent. Meanwhile, financial services firms will be laying off some 35,000 employees in the state. This is similar to what occurred in the industry after Sept. 11, 2001. But over the nine months after the terrorist attacks, the industry was able to turn a profit of $6.5 billion. Over the past nine months, the New York securities industry has reported cumulative losses of more than $40 billion. This has been devastating to the state's economy.
In Maryland, citizens and state leaders came together early to confront a record $1.7 billion structural deficit. In difficult economic times, an age-old dilemma arises: Do state leaders abandon their priorities, or do they make the tough decisions necessary to restore fiscal responsibility and advance the common good? Maryland has chosen to make choices -- sometimes very hard decisions -- based on shared values.
States are doing their part to build budgets that reflect revenue while making critical investments.
In New York and Maryland, we have made targeted investments in clean, renewable energy. We have stepped up where the federal government has fallen down to make critical investments in our infrastructure, including mass transit and roads. We are also supporting foreclosure prevention programs and investing in public education so our students continue to improve and excel, and increasing access to health care for those who remain uninsured.
Unlike the current administration in Washington, state governments are choosing to do more with less. In New York, state agencies were asked to slash their budgets by 3.35 percent in March; this has produced $500 million in savings so far. Just yesterday, agencies were asked to cut an additional 7 percent, to produce an additional $600 million in savings. Maryland has made $1.8 billion in cuts and spending reductions and eliminated more than 700 government jobs; it has also implemented StateStat, a system of performance measurement to improve government accountability and efficiency.
But no matter how prudent states are, they cannot solve the nation's economic problems on their own. The federal government must provide serious leadership and resources and be willing to make difficult short- and long-term decisions to move our country forward.
In the short term, federal officials must pass a second stimulus package that includes investments in our nation's infrastructure -- projects that will help us modernize our deteriorating roads, bridges and tunnels while stimulating our economy through job creation. It is estimated that for every $1 billion invested in transportation projects, 42,000 jobs are created, and that every dollar spent on infrastructure projects generates about $5.70 in economic activity.
Other short-term stimulus investments should include an additional extension of unemployment insurance and assistance for low-income Americans -- especially when it comes to helping families afford the energy it will take to stay warm this winter.
In the long term, our federal government should examine its fiscal track record from the past several years. We can no longer allow irresponsible spending, chronic underfunding of critical programs and a refusal to partner with state governments to determine the economic future of our country. It is time for fiscal responsibility.
David A. Paterson is governor of New York. Martin O'Malley is governor of Maryland. Both are Democrats.