Public Assets Institute > Policy Areas > Vermont Budget > We can’t wait for Congress

We can’t wait for Congress

Except as further evidence of Congress’s dysfunction, we shouldn’t mourn last week’s failure of the so-called Super Committee. Newt Gingrich’s critique was right on the money: Such a committee never should have been created in the first place. Addressing the country’s fiscal problems is the responsibility of the existing committees of Congress, and the job needs to be done openly, not in secret meetings that only lobbyists can attend.

That said, last week’s meltdown creates a big problem for Vermont—along with the rest of the states—as it prepares to develop a state budget for the 2013 fiscal year, which begins next July 1. The bill creating the Super Committee called for automatic budget cuts if the committee failed to meet its deficit reduction targets. The automatic cuts don’t take effect until January 2013, which leaves Congress to continue to fiddle until after the November elections.

The states, meanwhile, have to proceed on the assumption that the automatic cuts will occur on schedule, which will be smack in the middle of fiscal 2013 for most of them. This auto-pilot plan is the least responsible way to start to close the budget deficit because it doesn’t require any additional revenue. Nevertheless, the states have no choice but to develop their budgets next year around this worst-case scenario.

Maybe the message of the Occupy Wall Street will carry into the November elections. Maybe the next Congress will start thinking about national budget priorities that address the needs of the 99 percent rather than cater to the 1 percent. But the states can’t count on that, and by November much of the damage will already have been done.

There are no estimates yet of how the automatic cuts will affect federal funding to the states for specific programs. Those will emerge in the coming weeks and months. Rather than passively waiting to take the hit, Vermont should prepare to step in to take the action that Congress is seemingly incapable of taking. If members of Congress won’t raise revenues to pay for needed services, then Vermont ought to do it for them. We could call them “federal replacement revenues,” and if a new Congress accepts its responsibility and raises the taxes that have to be raised, Vermont’s replacement revenues could expire automatically.

Vermont wasn’t afraid to move forward with real health care reform when Washington failed to respond to voters’ desire for a public option. Yes, it probably would have been better to do this at the national level, but that wasn’t going to happen, so Vermont had to do something. Similarly, Governor Shumlin is right that it would be better if Congress would raise historically low federal taxes. But, again, if Washington won’t act, Vermont should claim the unused federal taxing capacity to generate the revenue necessary to meet its responsibilities to the citizens of the state.

Posted by Jack Hoffman on December 2, 2011 at 3:17 pm

2 Responses to “We can’t wait for Congress”

  1. Betty Edson says:

    I couldn’t agree more! Betty

  2. Jaclyn Harman says:

    Excellent idea. Also I don’t see many comments on the fact that the Bush “tax cuts” will also expire if Congress does nothing. That would surely solve some of the “revenue” problems even if it means we all will have to pay more. At least those who have gotten away with ridiculous tax rates will pay more of their share…jackie