Later this week, the Governor is expected to release her supplemental budget to close the $2.6 billion deficit that is a result of the ongoing economic crisis. State lawmakers will have difficult decisions to make in the upcoming months, as they find a way to balance the state budget. We encourage them to take a balanced approach that includes revenue enhancements as well as spending reductions to protect essential public structures such as health care and education.
Raising revenue is a better alternative for our state economy than budget cuts. In a paper for the Center on Budget and Policy Priorities, Nobel Prize winning economist Joseph Stiglitz and Peter Orszag, now director of the Office of Management and Budget, wrote, “In the short run (which is the period of concern during a downturn), the adverse impact of a tax increase on the economy may, if anything, be smaller than the adverse impact of a spending reduction, because some of the tax increase would result in reduced saving rather than reduced consumption.”
Last February, the Budget & Policy Center released a letter signed by over 20 economists and public policy experts in Washington State urging lawmakers to take a balanced approach, including revenue increases, when addressing the state’s budget deficit. “Implementing deep cuts in government spending and declining to raise revenue through tax increases is not an effective strategy to guide Washington State out of this recession,” the letter states.
The letter remains a potent reminder to lawmakers to consider all options for balancing the budget in the challenging months ahead. We certainly hope that they will.
Raising revenue is a better alternative for our state economy than budget cuts. In a paper for the Center on Budget and Policy Priorities, Nobel Prize winning economist Joseph Stiglitz and Peter Orszag, now director of the Office of Management and Budget, wrote, “In the short run (which is the period of concern during a downturn), the adverse impact of a tax increase on the economy may, if anything, be smaller than the adverse impact of a spending reduction, because some of the tax increase would result in reduced saving rather than reduced consumption.”
Last February, the Budget & Policy Center released a letter signed by over 20 economists and public policy experts in Washington State urging lawmakers to take a balanced approach, including revenue increases, when addressing the state’s budget deficit. “Implementing deep cuts in government spending and declining to raise revenue through tax increases is not an effective strategy to guide Washington State out of this recession,” the letter states.
The letter remains a potent reminder to lawmakers to consider all options for balancing the budget in the challenging months ahead. We certainly hope that they will.
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